Jury Anger Displayed - The Public is Awake

Thu, Jul 24, 2014 - 10:53am

As a follow-up to some earlier posts, this post brings into view the public perception component of the housing crisis, in real time, in a definitive, compelling manner.

Last week, in a quiet, bucolic part of this lovely state of California, the jury rendered a verdict in a predatory lending case.

Let's recall the basic story:

(1) Lenders recklessly created residential real estate loans, out of thin air, granting loans to anyone who could fog a mirror. Radical new loan products emerged, such as no income no job loans, option loans, pick a payment, etc. This loan generation process generated fees to the lender for the loan origination. Other fees were tacked on to the loan, and many industries benefited, such as appraisers, realtors, insurers, as well as companies who built houses, and provided goods to furnish all the new houses filled with brand new home owners. The govt was fully supportive of this massive effort, too. No-one had any incentive to stop this madness, as all incentives aligned to perpetuate this free money scheme in the short term; no-one considered, or appears to have ever cared, of any intermediate term or longer term ramifications of this short-sighted, immediate, feel good scheme to place unworthy borrowers into a lifetime debt trap. Bernanke never saw it coming, or so he says . . .

(2) Following creation of the loan, the lenders sold or transferred or assigned the rights to the loan to other companies, who (1) purportedly placed the loan into a trust, thus creating a mortage-backed residential loan security, which was then sold on Wall Street as an investment vehicle, and (2) variously performed the loan servicing [collecting the payments from the homeowner, applying the payments to the various tranches of the various assignees of the loans, and initially, engaging in efforts to restructure loans as they began to go sour].

(3) The housing bubble then burst, exploding the whole fog-the-mirror-and-get-a-giant-loan scam for what it was, a giant ponzi scheme operating on a greater-fool theory.

(4) As part of the aftermath to the housing bust, naturally, private industry looked for solutions, all of which involved either outright fraud [creating fake paper and simply refinancing the earlier bad loan to hide the problem, robosigning fake documents to process MILLIONS of foreclosed homes, etc.], or some form of kick the can until some magic solution showed up [endless loop home loan modification processes, designed to simply allow the servicer to generate fees, while simultaneously allowing the entity holding the "investment" to not realize any losses from a defaulted loan].

(5) As private solutions, namely fraud and more fraud begin to reach the public perception, naturally, politicians emerged with supposed "solutions." Obumbler stepped in as the mouthpiece for the banks, implementing various federal govt plans designed NOT to wipe clean the bad debt, but to instead enrich the banksters by perpetually enslaving the debtors in an endless stream of monthly debt service, thus both (1) avoiding any real solution to the problem, which was simply bad debt that needed to be cleared, and (2) avoiding insolvency of the financial giants based on the default of massive secured paper that would have destroyed the western fiat currency system thus leading to TARP, and endless FED bailouts and our now perpetual ZIRP policies and rendering the fiat system a zombie.

(6) As the endless loan mod programs emerged and became operational, naturally, the incentive structure was changed. Servicers did not want loan mods, as that cut their revenues. Investors did not want to realize losses, so loan mods were delayed perpetually in a never ending string of constant requests for information, delays, denials, and transfers and sales of the underlying paper.

(7) Eventually, devoted and diligent attorneys began getting cases to court, keeping them in court, despite the obstacles, namely, the judges' resistance to debtors' getting "free homes," as well as the absolutely limitless wellspring of money and resources poured into the foreclosure machine designed to steal homes from MILLIONS of homeowners based on fraud;

(8) Some cases survived long enough to get into appellate courts, which began to realize the scope of the problem, thus triggering serious attention from law enforcement, including state attorney generals [corrupted as they ALL are, they are still politicians, and need votes, so this provided some opportunity for them to appear to be part of the solution];

(9) Some federal and state govt action lead to some settlements with the fraud banks, all of which were pittance settlements and nothing more than attempts to secure litigation waivers against future court cases from individual debtors;

(10) Eventually, enough case law support emerged, and enough collective skill and knowledge of superb lawyers spread around the country, and discovery documents began to appear, along with deposition testimony of those corrupt banksters and fraudsters leaking out into the public, that eventually the truth began to appear.

(11) Some judges began to let these cases proceed beyond the pleading stage, on various legal theories, and eventually, even in this wretched socialist state of Kalifornia, juries have begun to get these cases.

One such case is here: https://www.sacbee.com/2014/07/18/6566661/yuba-jury-awards-16-million-in...

How's this for an opening paragraph:

"It started out as a simple loan modification for a troubled homeowner. It turned into a $16.2 million jury verdict against a nationwide loan-servicing company."

Nice, huh?

Read the short article, and understand that the collective wisdom of the folks, the jurors, has now awakened to the real story of the housing bubble and bust.

Understand that no economic "recovery" can EVER occur until all of this bad debt is expunged from the system. Until this massive debt is wiped clean, the debtors will either struggle along in debt service, which means NO consumption at the Walmart, thus depriving the economy of vital money velocity and all that it entails, or they will default thus requiring write-downs, and reduction of value of QUADRILLIONS of derivative financial products that are, essentially, worthless.

Who here thinks that any big write-downs will occur? If you do, please contact me for sale papers on the Brooklyn Bridge.

Thus, MOAR and MOAR fiat printing MUST occur, to keep papering over the fiat debt scheme, to allow for debt destruction via homeowner defaults, which are ongoing, and will be perpetual until 20 Million homedebtors' loans are cleared, along with all of the paper derivatives based on the defaulted paper.

Prepare accordingly.

About the Author


Jul 27, 2014 - 10:02pm

Spartus Rex-You Are Spot ON!

The much-admired Supreme Court Justice Hugo Black may be rolling in his grave at the prospect of a merger between 21st Century Fox and Time Warner Inc., which would reduce control of the major Hollywood studios to five owners, from six, and major television producers to four, from five.

“The widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public,” he wrote in the majority opinion that decided a 1945 antitrust case involving major newspaper publishers and The Associated Press. “The First Amendment affords not the slightest support for the contention that a combination to restrain trade in news and views has any constitutional immunity.”


But this ignores the fact that in 1983, 50 companies owned 90 percent of the media consumed by Americans. By 2012, just six companies — including Fox (then part of News Corporation) and Time Warner — controlled that 90 percent, according to testimony before the House Judiciary Committee examining Comcast’s acquisition of NBCUniversal.

“The situation is already terrible and this would make it worse,” said Susan Crawford, a visiting professor in intellectual property at Harvard Law School. Coupled with giant cable and Internet distributors, like Comcast and AT&T, “you’ve got two highly concentrated markets that need each other to survive and protect their profits,” Professor Crawford said. “The public interest side of this conversation is hopelessly outgunned.”


Spartacus Rex
Jul 27, 2014 - 9:41pm

F. Capra "C's of C"

How True

Re: The Red Pill

"Small is the number of people who see with their eyes and think with their minds." Albert Einstein

Cheers, S. Rex

F.CapraSpartacus Rex
Jul 27, 2014 - 9:25pm

Spartus Rex-The Cornered Animal

NSA, the "kill switch", violation of posse commitatus, bank "bail-in" provisions are all signs of an angry, desperate and increasingly "cornered animal." Those who have "taken the red pill" are few in number but powerful in recognition. A prime task is to be watchful and communicate. A second task is to prepare for the future much as the "Committees of Correspondence" did around 1740.

Spartacus Rex
Jul 27, 2014 - 9:01pm

@ F. Capra the "Red Pill"

thus most likely necessitated the NSA's data mining and the Internet "kill switch".

Cheers, S. Rex

F.CapraSpartacus Rex
Jul 27, 2014 - 8:56pm

Take The Red Pill

The quick and "pop" answer is to "take the red pill" per the 1999 movie, The Matrix. The more adequate answer is to hone one's ability to engage in critical thinking, be prudent about what you read and see in the electronic media and find other like-minded souls to discuss and examine "the reality". Two hundred and fifty years ago people in the Colonies began to meet and correspond including creating Committees of Correspondence. They read each other's work and that of important thinkers in France, England and Scotland. It took decades to break free of the control of the "ancien regime", first in France and then in England, and create new social norms and structures. We are perhaps now at a similar point today and "taking the red pill" is only become a bit more awake. But that is the step that makes controlled media very impotent.

Spartacus Rex
Jul 27, 2014 - 7:04pm

@ F. Capra Re: Concentration of Capitalism

Well, there is Capital and then there is the substituted counterfeited paper which purports to be capital, which for decades and generations has been created virtually out of thin air.

So which do you think is currently holding sway and running domestic policy, economic policy, foreign policy, aka in sum as “public policy”? The former or the latter?

And while we may occasionally joke about, or otherwise talk w/ tongue in cheek about TPTB's attempt to manage the news, we cannot overlook the detrimental effect such has caused for generations, or otherwise presume that the vast majority of people still to this day form their opinions and base their judgments upon these well entrenched sources of information owned primarily by three corporations.

Cheers, S. Rex

Jul 27, 2014 - 2:08pm

@Spartus Rex Capitalism and Freedom of The Press

I wonder how the apparently inevitable concentration of capitalism affects this right: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

Are you suggesting that corporate interests might shade meanings or even refuse to print facts or ideas that might go counter to corporate interests? I would be disturbed to think that Fox was not "always fair and balanced" or that Meet The Press, or Sunday Morning were scripted and rehearsed. This is just too grave a threat to a free people to even think about.

Spartacus Rex
Jul 27, 2014 - 7:48am

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Jul 27, 2014 - 7:12am

Nation In Decline--Managing the News

The short citation in the online NY Times only appears in the NY City print edition; yet it is high on the Times' list of both e mailed and read. I wonder why and how the decisions are made about "all the news that's fit to print" by the Old Gray Lady? Other media are picking up the Russell Sage report which is what the Times article is about but not large circulation traditional papers like the WSJ and Washington Post. Here in the concluding commentary from Zero Hedge:

Inequality in the U.S. today is near its historical highs, largely because the Federal Reserve’s policies have succeeded in achieving their aim: namely, higher asset prices (especially the prices of stocks, bonds and high-end real estate), which are generally owned by taxpayers in the upper-income brackets. The Fed is doing all the work, because the President’s policies are growth-suppressive. In the absence of the Fed’s moneyprinting and ZIRP, the economy would either be softer or actually in a new recession.

The greatest irony is that the President is railing against inequality as one of the most important problems of the day, despite the fact that his policies are squeezing the middle class and causing the Fed – with the President’s encouragement – to engage in the radical monetary policy, which is exacerbating inequality. This simple truth cannot be repeated often enough.

Jul 26, 2014 - 8:52pm

Nation In Decline.

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation.


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