And In The Movie Version, Helicopter Ben Is Played By...

...Paul Giamatti, ladies and gentlemen.  William Hurt is Hammerin' Hank Paulson, James Woods as doomed Lehman Brothers CEO Dick Fuld, and Timmy the Invisible Boy is played by Billy Crudup...




And that totally works, too.

HBO's movie "Too Big To Fail" will be out next year, based on Andrew Ross Sorkin's book (which is a good read.)

Turn On The Lights, Watch The Roaches Scatter, Part 19

Things fall apart, the center cannot hold.  Two potentially huge developments today in Foreclosuregate.  First, as expected every state other than Alabama is joining the state Attorneys General probe into this mess (Alabama?  Really?  Hey Matt Osborne, what's the deal with that?)

The 49 state attorneys general are investigating allegations some banks used shoddy paperwork to kick struggling borrowers out of their homes during a foreclosure crisis that is one of the most visible wounds of the 2007-2009 recession. 

"We are in the fourth year of a housing and economic crisis that was brought on by lax practices of the mortgage lending industry," Minnesota Attorney General Lori Swanson said in a statement. "The latest allegations of corner cutting and slipshod paperwork are troubling, but perhaps not surprising."

The attorneys general will be looking at the practice by banks and companies that collect monthly mortgage payments of using "robo-signers" -- people who sign hundreds of affidavits a day. It is alleged they did not properly review the documents they were signing.

The use of robo-signers "may constitute a deceptive act and/or an unfair practice or otherwise violate state laws," the attorneys general said in their joint statement.

Alabama was the only one of the 50 states not to join the investigation and it was not immediately clear why.

Ever wanted to pick up a red war phone and tell the person on the other side to "start the music"?  Effectively, the housing market has just taken a semi-permanent vacation until further notice.  There's not an insurance underwriter in the country who will touch a housing loan right now.  The housing market just got carpet bombed.

And that brings us to major development number two, via Zero Hedge:  JP Morgan Chase just threw MERS under the bus.  What's MERS, you ask?  It's "Robo-Signers R Us", the virtual reality that the mortgage banks created in order to play their shell game.

JPMorgan Chase's CEO says the bank has stopped using the electronic mortgage tracking system used by major financial institutions.

Lawyers have argued in court proceedings that the system is unable to accurately prove ownership of mortgages.

JPMorgan Chase & Co. and other banks have suspended some foreclosures following allegations of paperwork problems in thousands of cases.

JPMorgan's CEO, Jamie Dimon, made the announcement in a conference call Wednesday to discuss the bank's quarterly earnings.

The Mortgage Electronic Registration System, or MERS, acts as a trading house for millions of mortgages. Lawyers for homeowners say the system lacks the required paper trail to prove mortgage ownership in foreclosure proceedings.

MERS is the entity that's supposed to keep track of all the mortgage loans over the last five years.  Right now, the validity of every single 1 and 0 in their systems is now 100% suspect.  If JP Morgan Chase is walking away from MERS, then all the banks will.  And suddenly, nobody knows who has the note for which mortgage anymore, because gosh, how can we make sure the computers are telling the truth?

Please don your peril-sensitive sunglasses at this time, folks.  Your October Surprise is a-coming.  And as Felix Salmon reminds us, the banks' investors are going to want their pound of flesh too when they figure out foreclosures are just the tip of the iceberg.

So when you see the Village try to blame the American people for this mess because they "defaulted on their mortgages" remember...the banks don't know who owned those mortgages in the first place, so this would have blown up sooner or later anyway.

Now, whose fault is that?

The Adulation For Application Of Triangulation

Peter Baker's piece in the NY Times Mag on President Obama shows he has basically learned nothing about the Republicans and Washington in his first two years.

While proud of his record, Obama has already begun thinking about what went wrong — and what he needs to do to change course for the next two years. He has spent what one aide called “a lot of time talking about Obama 2.0” with his new interim chief of staff, Pete Rouse, and his deputy chief of staff, Jim Messina. During our hour together, Obama told me he had no regrets about the broad direction of his presidency. But he did identify what he called “tactical lessons.” He let himself look too much like “the same old tax-and-spend liberal Democrat.” He realized too late that “there’s no such thing as shovel-ready projects” when it comes to public works. Perhaps he should not have proposed tax breaks as part of his stimulus and instead “let the Republicans insist on the tax cuts” so it could be seen as a bipartisan compromise.

Most of all, he has learned that, for all his anti-Washington rhetoric, he has to play by Washington rules if he wants to win in Washington. It is not enough to be supremely sure that he is right if no one else agrees with him. “Given how much stuff was coming at us,” Obama told me, “we probably spent much more time trying to get the policy right than trying to get the politics right. There is probably a perverse pride in my administration — and I take responsibility for this; this was blowing from the top — that we were going to do the right thing, even if short-term it was unpopular. And I think anybody who’s occupied this office has to remember that success is determined by an intersection in policy and politics and that you can’t be neglecting of marketing and P.R. and public opinion.” 

Translation:  "Expect me to continually capitulate even more to the Republicans in a good faith effort to address their concerns and to tell anyone to the left of Ben Nelson to go straight to hell, right up until my impeachment for the crime of not giving the GOP 100% of what their Tea Party fanatics demand."

The Village will eat this up.  The Republicans will still impeach him anyway.  The Democratic base will of course, continue not to do much of anything.

Amazing to see Obama basically throw in the towel three weeks before the election in order to...what, exactly?  Convince independents that they should come back to him because he's not everything evil that the Republicans accuse him of?  Does he not get that the Republicans blame him for making them attack him on race, religion, ideology, policy, and everything else?

Good luck with that.  Jesus wept.

Unimpeachable Character, Part 2

Jon Chait:

Hear me now and believe me later: If Republicans win and maintain control of the House of Representatives, they are going to impeach President Obama. They won’t do it right away. And they won’t succeed in removing Obama. (You need 67 Senate votes.) But if Obama wins a second term, the House will vote to impeach him before he leaves office.

I would argue that if they win control of both the House and Senate now, this will happen in 2011.  The Tea Party will absolutely demand it, and they are going to have a real hard time saying "we have to put up with another two years of Obama at let voters decide".


The more seats the GOP wins in the House and Senate, the more likely impeachment in the President's first term will be.  However, Chait is correct:  if Obama wins re-election in 2012 and the GOP maintains control of the House, impeachment is a 99.999% probability.

Doom Patrol

The Hill's Shane D'Aprile and Emily Goodin open up with this breathless lede this morning:

Republicans are winning eight out of 10 competitive open House seats surveyed in a groundbreaking new poll by The Hill.

Taken on top of 11 GOP leads out of 12 freshman Democratic districts polled last week, The Hill 2010 Midterm Election Poll points toward 19 Republican victories out of 22 races, while Democrats win only two and one is tied.

The Democrats are DOOOOOOOOOOOOOO...wait a minute...(reads down a few paragraphs:)

Many races are tight — 12 of the 22 fall within the margin of error — but the margins, though slim, preponderantly favor the GOP.

The Oct. 2-7 poll examined 10 competitive open House seats; Republicans hold two of the districts and Democrats control all the others. Republicans are winning in eight of those races, while Democrats are leading in two. Six races fell within the poll’s margin of error.

Oh.  So...in reality, nearly all these races are actually effectively tied, and this being a midterm year the key will be turnout on actual voting, as well as people increasingly using early voting, and how many of those votes have been locked in, which we have no polling on.

In other words, it's still anyone's ball game.  Gosh, thanks for being clear about that, guys.

Working The (Early) Graveyard Shift

This set of statistics about the American worker is staggering.  We work longer, harder, more productively, and for fewer benefits and wages than any other Western country.   Here's a couple truly shocking facts:

• According to the Center for American Progress on the topic of work and family life balance, “in 1960, only 20 percent of mothers worked. Today, 70 percent of American children live in households where all adults are employed.” I don’t care who stays home and who works in terms of gender (work opportunity equality for all – it’s a family choice). Either way, when all adults are working (single or with a partner), that’s a huge hit to the American family and free-time in the American household.
• The U.S. is the ONLY country in the Americas without a national paid parental leave benefit. The average is over 12 weeks of paid leave anywhere other than Europe and over 20 weeks in Europe.
• Zero industrialized nations are without a mandatory option for new parents to take parental leave. That is, except for the United States.

Ahh, but it gets worse.

• Using data by the U.S. BLS, the average productivity per American worker has increased 400% since 1950. One way to look at that is that it should only take one-quarter the work hours, or 11 hours per week, to afford the same standard of living as a worker in 1950 (or our standard of living should be 4 times higher). Is that the case? Obviously not. Someone is profiting, it’s just not the average American worker.

Meanwhle, CEO salaries continue to skyrocket.  And there's this:

Even in Japan, you get two weeks of paid vacation no matter what you do for a living.  And yet here, some 40% of American workers aren't even offered vacation or holidays off.  We put in three weeks more work than even Japan does every year on average.

And yet many of us feel lucky just to have a job at all, and that if we say anything, we'll lose it.

How's that working out for you, America?

Turn On The Lights, Watch The Roaches Scatter, Part 18

How much trouble are the banks in right now?

This much.

In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.

In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud.

"The mortgage servicers hired people who would never question authority," said Peter Ticktin, a Deerfield Beach, Fla., lawyer who is defending 3,000 homeowners in foreclosure cases. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them — earning them the name "robo-signers."

The deposed employees worked for the mortgage service divisions of banks such as Bank of America and JP Morgan Chase, as well as for mortgage servicers like Litton Loan Servicing, a division of Goldman Sachs.

Ticktin said he would make the testimony available to state and federal agencies that are investigating financial institutions for allegations of possible mortgage fraud. This comes on the eve of an expected announcement Wednesday from 40 state attorneys general that they will launch a collective probe into the mortgage industry.

When I say these banks were running foreclosure mills, the robo-signing epidemic that was rampant across the industry is the reason why.  Banks just wanted a signature that the paperwork was correct, signed by people who simply needed a job and often had no qualifications to be looking at the paperwork for one mortgage foreclosure, let alone thousands upon thousands.

But the banks didn't care.  They needed to keep the shell game moving to stay in the game.  And now that game has caught up to them in a huge way.

It's the rest of us who will of course have to pay for it.

StupidiNews!

• Several miners have been rescued in Chile this morning, riding up a rescue capsule one at a time as the operation continues into tomorrow.
• An angrily defiant US Chamber of Commerce plans to increase its rate of political ad spending against Democrats after being attacked by the President over the weekend.
• The Obama administration's decision to begin lifting the offshore drilling moratorium early could benefit Gulf Coast Democrats.
• Americans think the worst of the economy is behind them, but that the road ahead will be long and difficult.
• Google is the latest major investor in offshore wind power farms in the Mid-Atlantic states.

Last Call

Live feed of the Chilean miner rescue going on here, courtesy of Reuters.

Hell of a thing.  Puts a lot into perspective about this last week or so.

Have a good night, folks.

It's For Our Own Good

Good ol' GOP Senate candidate Mark Kirk is running for Obama's old seat in Illinois, and he's got a plan to be helpful to some of the Land of Lincoln's citizens who just can't look out for themselves.

In a private phone conversation that was secretly recorded, Mark Kirk, the Republican U.S. Senate candidate in Illinois, told state Republican leaders last week about his plan to send "voter integrity" squads to four predominately African American neighborhoods of Chicago "where the other side might be tempted to jigger the numbers somewhat."

Kirk's campaign confirmed the candidate was secretly taped last week as he was talking about his anti-voter fraud effort.

"These are lawyers and other people that will be deployed in key, vulnerable precincts, for example, South and West sides of Chicago, Rockford, Metro East, where the other side might be tempted to jigger the numbers somewhat," he said in the audio posted on YouTube.

Because apparently, African-Americans in Chicago are just too "vulnerable" to voter fraud, you know, being...exactly what, I don't know.  Apparently we attract some sort of bizarre probability field that makes us need extra scrutiny from white Republicans when we vote.  You know, out of concern for us.  He's just looking out for our "integrity" and it's not a concerted effort to repress, intimidate, obfuscate or otherwise disenfranchise African-American voters in Chicago or anything.

Why, Republicans would never do that.  After all, I expect those same voter integrity squads to be in Chicago's other neighborhoods.  At Mark Kirk's expense.  In fact, all over Illinois.  Checking all voters.

Including Mark Kirk himself.

Unfunded Blunder

Meanwhile, the next big financial crisis (after Foreclosuregate here) may very well be state and local pension funds coming up a good $3.5 trillion short.

Big US cities could be squeezed by unfunded public pensions as they and counties face a $574 billion funding gap, a study to be released on Tuesday shows.

The gap at the municipal level would be in addition to $3,000 billion in unfunded liabilities already estimated for state-run pensions, according to research from the Kellogg School of Management at Northwestern University and the University of Rochester.

“What is yet to be seen is how this burden will be distributed between state and local governments and whether the federal government will be called upon for bail-outs,” said Joshua Rauh of the Kellogg School.

The financial demands of unfunded pension promises come as state and local governments grapple with years of falling tax revenue related to the recession.

The combination has raised concern that defaults, which are historically rare in the $2,800 billion municipal bond market where local governments obtain money, could now rise.

“The bondholders would be competing with the pension beneficiaries for scarce government resources,” Mr Rauh said.

$3.5 trillion in pension liabilities on on side, and $2.8 billion in municipal bonds on the other.  Is there any wonder state and local goverments are firing hundreds of thousands of employees right now?

As home values continue to plummet, so do property tax revenues, and the decrease couldn't come at a worse time.  No, this is the real federal bailout coming, and when this bill comes due, it's going to be a nightmare.

Don't Enforce Don't Ask Don't Tell

Because the federal judge in California that ruled against the measure has slapped an injunction on the Department of Defense preventing them from enforcing the policy, effective immediately.

Partial injunction order:

2) PERMANENTLY ENJOINS Defendants United States of America and the Secretary of Defense, their agents, servants, officers, employees, and attorneys, and all persons acting in participation or concert with them or under their direction or command, from enforcing or applying the “Don’t Ask, Don’t Tell” Act and implementing regulations, against any person under their jurisdiction or command; 
 
(3) ORDERS Defendants United States of America and the Secretary of Defense immediately to suspend and discontinue any investigation, or discharge, separation, or other proceeding, that may have been commenced under the “Don’t Ask, Don’t Tell” Act, or pursuant to U.S.C. § 654 or its implementing regulations, on or prior to the date of this Judgment.

So as of right now, DADT is dead.  Toast.  Kaput.  Unconstitutional and now unenforceable.

Now, having said that, the worst thing that could happen is that a bunch of folks in the military who are gay come forward and then the injunction is shot down by a higher court, in which case immediate discharge actions would be taken against everyone involved.

So right now, there's a stalemate.  No DADT investigations can go forward, but nobody can really come out in the military right now.  That's a different problem than say, yesterday, but a problem nonetheless.

This is a victory for everyone currently under a DADT investigation or facing discharge proceedings because of DADT.  So...net positive good thing.  For now.  We'll see what the Obama administration's response is, and they need to be very careful here this close to the election.  They don't have to appeal.

Finally, keep in mind that this was the Log Cabin Republicans that brought this case forward.  Believe me when I say the Obama administration needs to be deadly careful because there are those who feel that the Dems are taking the LGBT vote for granted.

A win-win here would be reserving judgment on appeal until the December Pentagon report on implementing another solution is released...or better yet, choosing not to appeal at all.

Turn On The Lights, Watch The Roaches Scatter, Part 17

Via the excellent Crooks and Liars (thanks for the link, guys) comes news that critical mass in Foreclosuregate may have been reached.  The White House may be cool to the idea of a national foreclosure moratorium, but some 40 state Attorneys General are about to drop the hammer and accomplish the same thing at the state level.

A coalition of as many as 40 state attorneys general is expected Wednesday to announce an investigation into the mortgage-servicing industry, an effort some of them hope will pressure financial institutions to rewrite large numbers of troubled loans.

The move comes amid recent allegations that mortgage-servicers, which include units of major banks such as Bank of America Corp., submitted fraudulent documents in thousands of foreclosure proceedings nationwide.

The World's Biggest Financial Mulligan is nigh!

The attorneys' general immediate aim is to determine the scale of the document problems and correct them. But several of them have said that the investigation could force the lenders and servicers to agree to mass loan modifications or principal forgiveness schemes. Other possibilities include financial penalties or changes in mortgage servicing practices.

Lenders and servicers have largely resisted reducing principal on mortgages, instead focusing on interest-rate reductions or term extensions. Banks say they are worried about lawsuits from investors, some of whom could lose money in a principal write down.

Former New Jersey attorney general Peter Harvey, now a trial lawyer in New York, said that a settlement with state attorneys general would likely "to give the banks some cover" to make changes that might otherwise result in lawsuits by investors in mortgage-backed securities.

The mortgage servicers had little to say in response to an impending multi-state probe. "We will work with the attorneys general to address the concerns they have expressed," said Dan Frahm, a spokesman for Bank of America. 

Rewrite the loans and lose trillions, or face up to 40 states suing the bejeezus out of you and lose trillions and then some.  Oh yes, and then the civil lawsuits, the shareholder lawsuits, and the creditors' lawsuits.  Somewhere, a Chief Legal Officer of a major US bank is urinating on themselves and wanting a nap and a juice box.

The market has already locked up.  Home prices will continue to fall because nobody is going to underwrite a loan in this environment right now.  Sales can't proceed.  Demand is effectively zero, so prices must go down, down, down.

Stay tuned for this one.  The banks know they are in egregious amounts of trouble now.  They will do anything to escape.  We can't let them.

[UPDATE]  Diana Olick's take on this is absolutely worth reading.

A source of mine pointed me to a recent conference call Citigroup had with investors/clients.  It featured Adam Levitin, a Georgetown University Law professor who specializes in, among many other financial regulatory issues, mortgage finance. Levitin says the documentation problems involved in the mortgage mess have the potential "to cloud title on not just foreclosed mortgages but on performing mortgages."

You know, as in "every other mortgage sale in the last several years is now suspect."  As in the entire friggin' United States housing market is basically a huge scam and nobody really knows now who owns which mortgage...least of all the banks themselves.


We are so very, exquisitely, completely screwed.

A Long Overdue Haiti Update

Nine months after January's earthquake, Haiti is still languishing as the tenth circle of hell.

"If it gets any worse," said Wilda, a homeless Haitian mother, "we're not going to survive." Mothers and grandmothers surrounding her nodded solemnly.

We are in a broiling "tent" with a group of women trying to raise their families in a public park. Around the back of the Haitian National Palace, the park hosts a regal statute of Alexandre Petion in its middle. It is now home to five thousand people displaced by the January 2010 earthquake.

Nine months after the quake, over a million people are still homeless in Haiti.

Haiti looks like the quake could have been last month. I visited Port au Prince shortly after the quake and much of the destruction then looks the same nine months later.

The Associated Press reports only two percent of the rubble has been removed and only 13,000 temporary shelters have been constructed. Not a single cent of the US aid pledged for rebuilding has arrived in Haiti. In the last few days the US pledged it would put up 10% of the billion dollars in reconstruction aid promised. Only 15 percent of the aid pledged by countries and organizations around the world has reached the country so far.

With other human rights advocates from CCR, MADRE, CUNY Law School, BAI and the Institute for Justice and Democracy in Haiti, I am huddled under faded gray tarps stamped US Aid. Blue tarps staked into the ground as walls. This is not even the hot season but the weather reports the heat index is 115.

And this is the future of disaster response when the global economy is all but destroyed.  In an era where the super-wealthy control 84% of America, what hope does Haiti and its people have?

We can't even afford to fix our own roads because we have to cut taxes for the top 2% of the country above all other priorities.  You thought the world was going to help Haiti?

We're a third world economy as it is these days.  Unless Adam Smith's invisible hand picks up a hammer and nails, this country's ruined for a long, long time.  And a lot of people are going to continue to die.

Chamber Of Secrets

Everything you need to know about the US Chamber of Commerce taking foreign donations to get Republicans into power story can be summed up by this horrified reaction from Blue Dogs in the LA Times.

Democrats expressing reservations have worked on behalf of moderate candidates with business backing. They recalled past attacks on former President Clinton and Vice President Al Gore for receiving foreign money and warned that White House charges now could lead to GOP reprisals, particularly if Republicans gain control of the House.

"The White House may reap the whirlwind," said one top Democratic staffer. "What are we going to do next year if a Republican Congress is making baseless claims about President Obama? We'll want the media to hold them accountable to the facts and the evidence."

The Democratic staffer and a handful of other prominent Democrats spoke on condition of anonymity because of the political sensitivity of the topic.

You know what this tells me?  A) the story is true, B) the Chamber is going to take it out on the Blue Dogs unless they kill this thing now, and C) the Blue Dogs are terrified.

It also tells me that Congressional staffers are idiots. "What are we going to do next year if a Republican Congress is making baseless claims about President Obama?"  Effing really?  What do you think Republicans have been doing for the last two years?  Have you knuckleheads learned nothing about how completely ineffective the strategy of "capitulating to the Republicans so they aren't mean you" is?

We can't follow up foreign/anonymous/unlimited contributions to our political system because it might make the Republicans attack Obama?

Jesus wept.  This country is heading straight for the toilet.