Please note I have a new phone number...

512-517-2708

Alan Maki

Alan Maki
Doing research at the LBJ Library in Austin, Texas

It's time to claim our Peace Dividend

It's time to claim our Peace Dividend

We need to beat swords into plowshares.

We need to beat swords into plowshares.

A program for real change...

http://peaceandsocialjustice.blogspot.com/2013/03/a-progressive-program-for-real-change.html


What we need is a "21st Century Full Employment Act for Peace and Prosperity" which would make it a mandatory requirement that the president and Congress attain and maintain full employment.


"Voting is easy and marginally useful, but it is a poor substitute for democracy, which requires direct action by concerned citizens"

- Ben Franklin

Let's talk...

Let's talk...

Sunday, December 9, 2007

MORTGAGE MELTDOWN

Please note: This particular blog is generating a great deal of discussion. I am posting some of those things that reflect the discussion.

MORTGAGE MELTDOWN

Interest rate 'freeze' - the real story is fraud

Bankers pay lip service to families while scurrying to avert suits, prison

Sean Olender

Sunday, December 9, 2007

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/09/IN5BTNJ2V.DTL




New proposals to ease our great mortgage meltdown keep rolling in to ease our great mortgage meltdown keep rolling in. First the Treasury Department urged the creation of a new fund that would buy risky mortgage bonds as a tactic to hide what those bonds were really worth. (Not much.) Then the idea was to use Fannie Mae and Freddie Mac to buy the risky loans, even if it was clear that U.S. taxpayers would eventually be stuck with the bill. But that plan went south after Fannie suffered a new accounting scandal, and Freddie's existing loan losses shot up more than expected.

Now, just unveiled Thursday, comes the "freeze," the brainchild of Treasury Secretary Henry Paulson. It sounds good: For five years, mortgage lenders will freeze interest rates on a limited number of "teaser" subprime loans. Other homeowners facing foreclosure will be offered assistance from the Federal Housing Administration.

But unfortunately, the "freeze" is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with "working families," keeping people in their homes or any of that nonsense.

The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth.

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

And, to be sure, fraud is everywhere. It's in the loan application documents, and it's in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies - all the way up to senior management - knew about it.

I can hear the hum of shredders working overtime, and maybe that is the new "hot" industry to invest in. There are lots of people who would like to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy time and make this all go away. Cuomo is just inches from getting what he needs to start putting a lot of people in prison. I bet some people are trying right now to make him an offer "he can't refuse."

Despite Thursday's ballyhooed new deal with mortgage lenders, does anyone really think that it can ultimately stop fraud lawsuits by mortgage bond investors, many of them spread out across the globe?

The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.

The problem isn't just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply - period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world.

Even your pension or 401(k) might have some of these bonds in it.

Perhaps some U.S. government department can make veiled threats to foreign countries to suggest they will suffer unpleasant consequences if their largest holders (central banks and investment funds) don't go along with the plan, but how could it be possible to strong-arm everyone?

What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back. The time to look into this is before the shredders have worked their magic - not five years from now.

Those selling the "freeze" have suggested that mortgage-backed securities investors will benefit because they lose more with rising foreclosures. But with fast-depreciating collateral, the last thing investors in mortgage bonds ought to do is put off foreclosures. Rate freezes are at best a tool for delaying the inevitable foreclosures when even the most optimistic forecasters expect home prices to fall.

In October, Goldman Sachs issued a report forecasting an incredible 35 to 40 percent drop in California home prices in the coming few years. To minimize losses, a mortgage bondholder would obviously be better off foreclosing on a home before prices plunge.

The goal of the freeze may be to delay bond investors from suing by putting off the big foreclosure wave for several years. But it may also be to stop bond investors from suing. If the investors agreed to loan modifications with the "real" wage and asset information from refinancing borrowers, mortgage originators and bundlers would have an excuse once the foreclosure occurred. They could say, "Fraud? What fraud?! You knew the borrower's real income and asset information later when he refinanced!"

The key is to refinance borrowers whose current loans involved fraud in the origination process. And I assure you it was a minority of borrowers whose loans didn't involve fraud.

The government is trying to accomplish wide-scale refinancing by tricking bond investors, or by tricking U.S. taxpayers. Guess who will foot the bill now that the FHA is entering the fray?

Ultimately, the people in these secret Paulson meetings were probably less worried about saving the mortgage market than with saving themselves. Some might be looking at prison time.

As chief of Goldman Sachs, Paulson was involved, to degrees as yet unrevealed, in the mortgage securitization process during the halcyon days of mortgage fraud from 2004 to 2006.

Paulson became the U.S. Treasury secretary on July 10, 2006, after the extent of the debacle was coming into focus for those in the know. Goldman Sachs achieved recent accolades in the markets for having bet heavily against the housing market, while Citigroup, Morgan Stanley, Bear Sterns, Merrill Lynch and others got hammered for failing to time the end of the credit bubble.

Goldman Sachs is the only major investment bank in the United States that has emerged as yet unscathed from this debacle. The success of its strategy must have resulted from fairly substantial bets against housing, mortgage banking and related industries, which also means that Goldman Sachs saw this coming at the same time they were bundling and selling these loans.

If a mortgage bond investor sues Goldman Sachs to force the institution to buy back loans, could Paulson be forced to testify as to whether Goldman Sachs knew or had reason to know about fraud in the origination process of the loans it was bundling?

It is truly amazing that right now everyone in the country is deferring to Paulson and the heads of Countrywide, JPMorgan, Bank of America and others as the best group to work out a solution to this problem. No one is talking about the fact that these people created the problem and profited to the tune of hundreds of billions of dollars from it.

I suspect that such a group first sat down and tried to figure out how to protect their financial interests and avoid criminal liability. And then when they agreed on the plan, they decided to sell it as "helping working families stay in their homes." That's why these meetings were secret, and reporters and the public weren't invited.

The next time that Paulson is before the Senate Finance Committee, instead of asking, "How much money do you think we should give your banking buddies?" I'd like to see New York Sen. Chuck Schumer ask him what he knew about this staggering fraud at the time he was chief of Goldman Sachs.

The Goldman report in October suggests that rampant investor demand is to blame for origination fraud - even though these investors were misled by high credit ratings from bond rating agencies being paid billions by the U.S. investment banks, like Goldman, that were selling the bundled mortgages.

This logic is like saying shoppers seeking bargain-priced soup encourage the grocery store owner to steal it. I mean, we're talking about criminal fraud here. We are on the cusp of a mammoth financial crisis, and the Federal Reserve and the U.S. Treasury are trying to limit the liability of their banking friends under the guise of trying to help borrowers. At stake is nothing short of the continued existence of the U.S. banking system.

Sean Olender is a San Mateo attorney.

Contact us at: insight@sfchronicle.com.

This article appeared on page C - 1 of the San Francisco Chronicle

****

My Comments: As most of you know I have tried to convince Minnesota legislators and two Minnesota Attorneys Generals, Mike Hatch and Lori Sawnson, to no avail, to take on these crooked and corrupt mortgage companies, the banks, real-estate companies, and speculators for over five years now.

Minnesota legislators from both political parties together with Hatch and Swanson have refused all my requests to act on this issue. I have met with Minnesota legislators in their homes and offices, many have called me in response to home fore-closures we have fought; they wring their hands and say, “Sorry, Al, there isn’t anything we can do.”

You know, this response is getting a little old.

Why are we continuing to elect people who give us the same response every single time over every single problem from home foreclosures to ending the war in Iraq, to single-payer universal health care to plant closings?

Worse than buying into what MN DFL party hack Steve Linnerooth refers to as “bullshit” when the accusation is made that nothing is being done; or, what is done makes life more difficult for working people, is the fact that people have compartmentalized their struggles on all fronts rather than merge these struggles against a common corporate enemy and the lackey politicians they have purchased to try to circumvent, derail, misguide and accept defeat.

Anyone who tries to separate ending the war in Iraq from the mortgage scandal and home foreclosure and plant closings along with the movement for single-payer universal health care is being very shortsighted.

All of these struggles are connected because the solution to all these problems is in the fundamental reordering of our state’s and our country’s priorities.

$1.6 TRILLION Dollars has already, to use Steve Linnerooth’s vernacular, been pissed away on the war in Iraq… considering that what U.S. imperialism intends for Iraq is a long-term occupation it is reasonable to assume we will soon see this figure rise to well over TEN TRILLION DOLLARS.

That is a whole lot of money that could better be going into establishing a government owned federal bank to take over these mortgages and keep plants operating under public ownership so jobs can be saved.

Common sense tells us that people who owe hundreds of thousands of dollars for a home mortgage are going to be foreclosed on and evicted when they lose their jobs at Ford Motor Company and have to go to work at McDonalds or some smoke-filled casino at poverty wages.

Combine these poverty wages with massive health care bills many working class families now owe (everyone is going to get a costly terminal illness if they live long enough, eh?) and we have a recipe for a major financial disaster in the making and we haven’t even discussed consumer debt!

Don’t believe anyone when they tell you the American economy is somehow immune from a massive depression in our future because the handwriting is all over the wall.

We have some very serious problems that will continue as long as state-monopoly capitalism is calling all the shots. Make no mistake, we are in for a rough ride with the corporations pushing for a clamp-down on all aspects of democracy as they try to prevent people from rising up in resistance and refusing to tolerate what is going on.

And it won’t make any difference whether Democrats or Republicans get elected; anyone who says differently is misleading the people.

Until we start to think outside the capitalist box nothing is going to change except life will continue to get more difficult for working people--- especially as this country sinks into the economic morass of a major, full-blown depression.

Anyone suffering from any illusions that things will be any different when the Republicans get drummed out of the Congress and from the presidency had better take a good hard look at what Democrats have done to date on these issues:

• Two Democratic Minnesota Attorneys General have not lifted a finger to stave off these home foreclosures as Democrats in control of both the Minnesota House and Senate have sat in complete silence and acquiesced to a powerless, washed up pandering to Bush Governor;

• These same Democrats sold out Ford workers trying to save their plant and their jobs;

• These same Democrats are now engaged in trying to derail the movement for real single-payer universal health care;

• These same Democrats have sat in complete silence as working class Minnesotans are sent off to their deaths in this dirty imperialist war for oil and regional domination in Iraq.


Hillary Clinton and Obama have traipsed through Minnesota raising money from the casino managements, the health insurance companies and the well-heeled along with a few dunces at the helm of major unions, and not once have they addressed a single one of these problems by advocating any real solutions.

Hillary Clinton and Obama continue to peddle the same old crap about "American vital interests in Iraq;" but when asked to clearly define and articulate what these "American vital interests" consist of thousands of miles over seas their big-mouths go silent.

My suggestion is that we not respond to any of the appeals for help from the Minnesota DFL or the Democratic Party presidential candidates; that we spend our time and our resources bringing all those concerned about these very basic problems together in a way we begin working for real solutions and let the politicians come begging to us for a change.

There is no reason Minnesota politicians can not make good on bringing a real single-payer universal health care system into being by Election Day 2008 along with halting all foreclosures and evictions while placing a complete moratorium on any further payments to these corrupt, shyster, parasitic, money-grubbing, crooked mortgage companies.

There are all kinds of lawyers in the Democratic Party; let a few of these lawyers take on a class action suit pro-bono on behalf of working class Minnesotans who have been so loyal in their support of the Minnesota Democratic Farmer-Labor Party. These lawyers live in huge mansions up on Summit Hill.

Of course, it would be even better to have candidates who have staked out ownership of these issues who are part of the struggles running for public office as an alternative to the “bullshit” we have now.

Something to think about around the kitchen table as you shiver in the cold because your home heating assistance has again been cut as the MN DFL sat in silence. I suppose now we will be hearing all kinds of platitudes as politicians and the union dunces who allow these dumb donkeys to do their thinking for them wax eloquent about the 59th Anniversary of the United Nations' Universal Declaration of Human Rights tomorrow--- December 10th.

I would suggest that these dumb donkeys be given an ultimatum: Make good on single-payer universal health care and halt these foreclosures and evictions as part of celebrating the 59th Anniversary of the United Nations' Universal Declaration of Human Rights so working people have something to celebrate on the 60th Anniversary--- a month after Election Day.


********************************

-----Original Message-----
From: Steve Linnerooth [mailto:stevendl2000@yahoo.com]
Sent: Sunday, December 09, 2007 10:19 PM
To: Alan Maki
Subject: Re: I saw this notice on Shove's progressive calendar about health care and I have a question...

Maki,
Afraid to send me your snide remarks? I am going to
type this real slow so you can read it on your own.
The DFL Platform Commission chose Universal
Single_Payer Healthcare as one of our Federal
Legislative Priorities for 2007-2008. You would be of
much greater help if you were to encourage your
readers to help to lobby for HR 676 and to introduce
resolutions supporting universal single-payer
healthcare at the precinct caucuses the you are making
an ass of yourself.
Steve Linnerooth


-----Original Message-----
From: Alan Maki [mailto:amaki000@centurytel.net]
Sent: Monday, December 10, 2007 12:30 AM
To: 'Steve Linnerooth'
Cc: 'brian.melendez@usa.net'; 'susan.rego@embarqmail.com'; 'David Shove'; 'Charles Underwood'
Subject: RE: I saw this notice on Shove's progressive calendar about health care and I have a question...

Linnerooth,

Glad to hear you are doing such a superb job lobbying. Now, if you can overcome the lobbying efforts of Brownstein/Hyatt/Farber/Schreck the big-time Democrats responsible for orchestrating what will take place at the Democratic Party National Convention you will be all set.

Oh, by the way, has Conyers told you that there are fewer Democrats now supporting H.R.676 than ever before?

Do you suppose Conyers will back out of his support for H.R. 676 the same way he has withdrawn from impeachment proceedings?

Steve, you hang on to that dumb donkey's tail long enough and you will get a handful of shit.

Again, feel free to read my comments about you on my blog.

I find your comments about resolutions to be nothing but a self-serving rant since you know that I was the original author of the resolution passed by 72% of the delegates to the last MN DFL State Convention and you are fully aware that the resolution unanimously passed by the Roseau County convention was dropped in the circular file by you and Melendez.

Again, here is the gist of that resolution: "no fee, comprehensive, all-inclusive [from pre-natal to dental and eyes to prescriptions], single-payer, universal health care that is publicly administered and publicly financed."

When you are lobbying my good friend and good buddy John Conyers, please let him know that I will probably be coming to see him along with Cindy Sheehan the next time she pays him a visit.

Alan

Alan L. Maki
58891 County Road 13
Warroad, Minnesota 56763
Phone: 218-386-2432
Cell phone: 651-587-5541
E-mail: amaki000@centurytel.net

Check out my blog:

Thoughts From Podunk

http://thepodunkblog.blogspot.com/

********************


-----Original Message-----
From: Steve Linnerooth [mailto:stevendl2000@yahoo.com]
Sent: Monday, December 10, 2007 5:36 AM
To: Alan Maki
Subject: RE: I saw this notice on Shove's progressive calendar about health care and I have a question...

Maki,
Can't handle the truth can you?
Steve Linnerooth


-----Original Message-----
From: Alan Maki [mailto:amaki000@centurytel.net]
Sent: Monday, December 10, 2007 8:50 AM
To: 'Steve Linnerooth'
Cc: 'brian.melendez@usa.net'; 'Steve Linnerooth'; 'Neva Walker'; 'rep.al.juhnke@house.mn'; 'rep.bill.hilty@house.mn'; 'rep.dave.olin@house.mn'; 'rep.frank.moe@house.mn'; 'sen.jim.metzen@senate.mn'; 'sen.john.marty@senate.mn'
Subject: RE: I saw this notice on Shove's progressive calendar about health care and I have a question...

Linnerooth,

It is not that I can't handle the truth; the problem is: Minnesotans can not handle the health care bills that have piled up as the HMO's, doctors, hospitals and nursing homes are taking their homes in payment.

Alan



Alan L. Maki
58891 County Road 13
Warroad, Minnesota 56763
Phone: 218-386-2432
Cell phone: 651-587-5541
E-mail: amaki000@centurytel.net

Check out my blog:

Thoughts From Podunk

http://thepodunkblog.blogspot.com/


***********


There's this Dem hack named Linnerooth
He says People don't need the truth
It gets in our way
And darkens my day
And forsooth, 'tis uncouth, so screwth.


--David Shove


***********

It’s good to see the dirty secret being hidden behind all this concern for the average Joe/Jane. It’s fine to call for an investigation and charges and if there’s a way to do that, let’s. Still, I won’t hold my breath waiting to see the top financiers called before a grand jury in New York or anywhere and prosecuted. Maybe one or two to take a small, cushioned and well-publicized fall, but not the network of crooks who hold top banking and Wall Street jobs who packaged and sold these phoneyed mortgages as ‘investment-grade’ and not the speculative, junk they were.

Why say that? Because there are a million threads linking the criminal justice system to the larger capitalist system and its corporate/political managers. At the local level, lying cops and thieving ‘connected’ contractors are protected by prosecutors. At the federal level, top execs are untouched as they loot and steal, with a few scapegoats from time to time. Any prosecutor who even began to charge those responsible at the top would be hung out to dry in a heartbeat.

How many top Enron execs went to jail? 2? How many of the bankers and others involved? None. WorldCom? The same. Reaching back into a political example: How many top corporate owners were ever brought to a grand jury when they plotted to overthrow the US government and impose a military dictatorship with Marine General Smedley Butler in 1938? (He testified to a Senate committee about the whole deal, ratting them out.) Hell, how many of us even heard of this in any class in any school?

Alan Maki suggests that the money spent in the Iraq invasion/occupation could be better spent here. True, but this line of (wishful) thinking ignores a fundamental reality: there is no trade off since an imperial military is necessary for promoting US big business interests around the world, 1. And, 2, the US military is the ‘cop of the world system’ to keep the minor players in line. That’s the outcome of the US victory in WW2 and the aftermath.

Since American capitalism is necessarily imperialist and not simply a budgetary imbalance, calling for a switch in funding objectively promotes a smoke-induced hallucinatory quality to the discussion: “What if they had to give a bake sale for the military?” used to be a popular sign of the wishful-thinking crowd. And, “What if they gave a war and no one came?”

If you think this is unfair, ask yourself this: “What happened to the ‘peace dividend’?” That increase in social spending we were promised after the fall of the Soviet Union and the Cold War? We had a Democratic president and Congress in 1992. We got NAFTA, ‘the end of welfare as we know it’, and the forced introduction of more workers into low-paying, no benefit jobs that meant more profits and pressure on existing workers’ pay. What should that tell us?

Alan Maki’s call to organize ourselves and fight for what we need and not rely on their politicians is good. It’s also good to see that money and wealth exists that could be used for our human needs and in ecologically sane ways. Here’s the basic problem I see with that- instead of calling on the politicians to come begging to us, we need to see clearly the need to end capitalism’s grip on our lives, not project yet more feel-good illusions like spending military money on our health care. That will only be possible when we create a new society based on the power and solidarity of those who end the current system and replace it with one based on global solidarity and democratic planning.

Earl Silbar
Chicago