Obama Says GOP Will Repeal Financial Reform

And I say "Hoorraaayyyy!!!!"

Politico reports:

In his weekly Saturday address, President Obama warned that if Republicans take control of congress this November, they would repeal consumer protections in the Frank-Dodd financial regulatory reform legislation, which he called “one of the most important victories” he has achieved in office.

“Despite the importance of this law—and despite the terrible economic dislocation caused by the failures in our financial system under the old rules—top Republicans in Congress are now beating the drum to repeal all of these reforms and consumer protections,” Obama said

The bill was designed “to rein in the secret deals and reckless gambling that nearly brought down the financial system,” the president said. “It set new rules so that taxpayers would never again be on the hook for the bailout if a big financial company went under.”

Have you read the bill, Mr. President? Taxpayers will be solidly on the hook for the bailout. Instead of one gigantic, highly visible TARP-like payment, taxpayers will be sucked dry over time with extra fees here, extra tax there, and forced to support the FDIC which is totally broke already.

"Rein in the secret deals and reckless gambling"? My problem here is two-fold. First, "rein in"? So he is saying the bill was designed to control and check "the secret deals and reckless gambling" - meaning they will never stop. Second, who enabled such "deals" and "gambling"? The Federal Reserve and GSEs like Fannie and Freddie. The former with the loose monetary policy, the latter with securitization of mortgages that encouraged loose underwriting standards. Where were the government agencies who were supposed to regulate them? Nowhere. And no one can regulate the Federal Reserve - a consortium or co-op of major banks.

Also, as they say, "Devil's in the details." The bill, even though it was another 1000-pages-plus monster, is not fleshed out with actual detailed rules and regulations. The Treasury Department and the Federal Reserve are going to come up with such rules and regulations over time - i.e. they can write whatever they (or Goldman Sachs or J.P.Morgan Chase, or Blackrock or PIMCO..) want.

But what does his financial "reform" bill do for sure? Empower the Federal Reserve even more so that it can preside over every aspect of the financial lives of ordinary Americans. Even the ex-central bank chief Paul Volcker was amazed (which by the way received scant attention and coverage. He even scrapped the prepared speech to deliver his very strong criticism.).

And what does the bill NOT do? Do anything with Fannie and Freddie, who keep sucking in taxpayers' money like blackholes. Now the final combined bills are estimated to be $259 billion, the worst scenario by the optimistic FHFA, and thanks to the Christmas present by Turbo Tax Timmy last year, the sky's the limit on how much they can continue to lose.

I don't like the lies in the next segment either:

The financial services industry has been wary of more stringent regulation in the Frank-Dodd financial reform bill, which Obama signed in July. And Obama has tapped Harvard Law Professor Elizabeth Warren, who is credited with conceptualizing the Consumer Financial Protection Bureau, to lead its formation in the coming months.

“Reform included the strongest consumer protection in history—to put an end to a lot of hidden fees, deceptive mortgages, and other abusive practices used to tilt the tables against ordinary people in their financial dealings,” Obama said. And the consumer protection bureau “will have just one job: looking out for ordinary consumers in the financial system.”

Citing recent allegations of widespread foreclosure fraud in the still-weak housing market, Obama said the nascent bureau would protect consumers from “unfair practices in mortgage transactions and foreclosures.”

Instead of formally nominating Elizabeth Warren, Obama has made her one of his czars - accountable only to him, no Congressional oversight.

And it is really funny that he mentions foreclosure fraud. His emissaries - Geithner, Axelrod, HUD chief Donovan are outright dismissive, talking it down as minor processing errors and siding solidly with the bankers. According to this administration, forgery and misrepresentation are minor processing errors, if they are done by big banks and their affiliates.

The last bit of the article is equally funny:

He added that Republicans in Congress have promised to make repealing the bill a priority if they become the majority party.

“I think that would be a terrible mistake,” Obama said. “Our economy depends on a financial system in which everyone competes on a level playing field, and everyone is held to the same rules—whether you’re a big bank, a small business owner, or a family looking to buy a house or open a credit card.”

GOP needs 2/3 majority in the Senate to override his veto. Even under the most optimistic estimate, GOP will get about 50% of the Senate seats. Even adding the toss-up seats, it won't be anywhere near 2/3 majority.

"Our economy depends on a financial system in which everyone competes on a level playing field, and everyone is held to the same rules" - hahahahahahahahaha. What "level playing field"? What "same rules"? Did he even try to level the playing field, apply the same rules? (What are the rules? I didn't even know they existed.) The answer is resounding NO.

The rules and regulations have been there all along. No one has bothered to actually enforce them. To solve the problem of not having enforced the rules and regulations, he creates more rules and regulations and foist on the taxpayers the burden of funding the ever-growing federal government bureaucracy to maintain those rules and regulations. I have a feeling that any "enforcement" will be done on the easiest target, which is the taxpayers, the 'small people'.

Just like the health care "reform" bill, no one knows exactly what's in the financial "reform" bill, as the details of these bills are being written by the government agencies (and lobbyists and non-profit foundations and big labor unions and...). And we're supposed to take Obama's word for it, that it is good for us.

This financial "reform" bill - isn't it fitting that the bill's formal name carries two of the most corrupt, in-the-pocket-of-TBTF banks politicians on the Hill? The formal name of the bill which is the law of the land is "Dodd-Frank Wall Street Reform and Consumer Protection Act".

The full title is even funnier: "An Act to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."

And for other purposes. Like what? Funding Afghan war? Subsidizing Government Motors? Paying more to the public union workers (teachers, police, firefighters)? Prepare for anything and everything, as this bill is nothing but evolving, changing document.

OK, that's my rant for the Saturday morning...

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Flash Crash of the Day: DXY (US Dollar Index)

Gee, another "Waddell & Reed", right, Ms. Shapiro?

Good thing it happened after hours. I hate to think what would have happened if it were during the regular stock trading hours.

Some stockboard members at Yahoo were watching it real-time as US dollar was "flash-crashing".

It seems the bots' attack was on Euro, looking at the charts linked at Zero Hedge:

(There are two more charts at Zero Hedge: EUR/CHF and GBP/CHF)

And as Tyler at Zero Hedge says, "At this point, who really cares anymore?"

After all, there were four "Hindenburg Omens" in August - supposed harbinger for an imminent stock market crash, occuring not once but four times. And what did we get in September and October? 11% rally in the stock market, to compensate for 7% decline in DXY.

Yup. Who cares? Real fun will begin when the OTC derivatives like Credit Default Swaps will have to be traded on a public exchange, thanks to the "Friend of Angelo" Dodd-"Intimate friend of Fannie Mae Exec" Frank finance "reform" bill. I can't wait to see what the algo bots can do there.

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Jim Willie: Greece Is China's US$ Swapping Facility

Greece is used as a conduit by China to dump US Treasuries to buy Euro, with which to by the Greek debt which will be backed by the mightly Germany. Thus the rapid and unwarranted appreciation of Euro, and politicians in Berlin and bankers in Frankfurt were caught flat-footed.

The Jackass, aka Jim Willie, made this observation in his latest free newsletter on October 20, 2010 [emphasis is mine]:

NEW DOLLAR SWAP WINDOW (MADE BY CHINA)

China is dumping USTreasurys by way of the Europe, using a back door whose design was handed to them. Their support of the Greek Govt debt jammed that door wide open. Thus the rising Euro currency without justification, one of a few factors. Usage of the window has led to an indirect Chinese forced devaluation of the USDollar, an extremely clever action. China has never appreciated being repeatedly called a currency manipulator. From 1999 to 2005, the USGovt gave full support to the Chinese Govt, as the Yuan currency was pegged to the USDollar. The USGovt saw the policy as providing stability to the USDollar at a time when foreign investment by US firms in the Middle Kingdom was brisk and strong. In a three-year period, the US multi-national firms invested $23 billion in Chinese industrial plants, like the 160 Wal-Mart plants. The misguided USGovt and hapless US economists eagerly awaited the great bounty from Low Cost solutions that exploited cheaper Chinese labor, lower tax structure, even absent regulations. A decade wave of corporate profits evaporated, amidst growing debt and the housing bust. Meanwhile, the Chinese Govt would accumulate $2.5 trillion in savings, held as USTreasurys for over $800 billion. Suddenly, China is a currency manipulator. However, the vast monetization initiatives enacted by the USGovt and its partner USFed with $1.5 trillion in freshly printed money to support the US$-based bonds which few foreign creditors wanted, that action is highly manipulative to currencies!!

The missing piece is that the Wall Street helm has ignited the currency bonfire by not pursuing a multi-lateral agreement by USGovt creditors. They have never been consulted on monetary inflation, debt monetization, and austerity measures. The United States acts unilaterally with great privilege, as they claim some of sort of glorified mission, a Manifest Destiny ridden atop bond wagons. The Chinese apparently have a plan to swap their USDollars for Euros, using the Greek back door.

A well placed banker source in Europe passed an opinion along. The Jackass was aware of the Chinese nibbling with purchases of Greek debt. However, the initiative had a clever motive for an expanded role. The German Euro supporters have been caught flat-footed, inattentive to guard the door. By refusing to permit a default in Southern Europe of sovereign debt, the Euro Central Bank and EU leaders have exposed a vulnerable pathway soon possibly to turn into a highway. The banker source wrote, "After having de-facto bought Greece, the Chinese are now members of the Euro system or Greece is now a member of two currency systems, to be used at will. So China will now use its USTreasury Bonds to buy Euros, which will be used to buy Greek Govt bonds. These bonds will be guaranteed by Germany. This is very clever and no one saw the dual usage of the system, except a few very clever people. The politicians in Berlin and bankers in Frankfurt were sleeping at the wheel as usual and now will pay a heavy price." It goes deeper. Greece has agreed to support EU recognition of full market economy status for China, while China has agreed to support the call by Greece for UN mediation over Cyprus.

The Chinese have essentially created a Dollar Swap Window, a small one admittedly. It will grow over time. Attempts to rein it in will be difficult. Imagine runaway traffic at the window, the galloping process of the Greek Dollar Swap Window. The Europeans eagerly opened the window for China to invest money in Greek Govt debt, which European nations did not want to commit to. So China has a small pipeline in which to shove USTreasurys, to convert them to Euros will full blessing and approval of the Euro Central Bank, and to buy a stake in Greece. Beijing could not give a dragon's big toe of concern for Greece. They wanted a window to dump USDollars. Next look ahead, and remain objective. The Chinese might be motivated to invest in Spanish Govt debt, some Portuguese Govt debt, and later some Italian Govt debt and even some French Govt debt. Leave Ireland alone, a lost cause, after a foolish decision to adopt the suicidal IMF austerity plan. They are headed toward systemic failure.

So China has found a clever back door Dollar Swap Window. So far it only has a Greek label on the glass with Greek trucks on the dock, with Chinese standing in line. Soon the Latin debt will open up adjoining windows in an expanded Dollar Swap Window facility. The USFed and USDept Treasury were not invited to this planned project. The key point upcoming is not the volume of European sovereign debt to be covered by China, even at discount in implied writedowns. The key point is other broader usage of the window. Watch and observe how the Chinese will eventually be accused of swapping far more USTreasurys through the window than purchased Greek Govt debt, or any other sovereign debt. The Chinese will attempt to dump as much USTreasurys as they can before the window closes, shut under pressure by the USGovt. In the meantime, the Euro currency rose to touch 141 per greenback unit two weeks ago. That is a rather impressive run from 127 in early September. The European fundamentals do not justify such a big 11% move. At 140 the exchange rate is still lofty. If the Chinese expand the usage of their clever new Dollar Swap Window, the Euro could rise to 150. Such is the heavy price paid by the EuroCB and EU leadership for refusing to permit a Greek Govt debt default. The Open Door Policy to China found a back door !!!

For the full newsletter, go here.

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Everyday Is a Fed Day, One Way or Another...

Today was a non-POMO day, but it was a reverse-repo day. I don't quite understand why the Fed even bothers to do this, but it is an operation to suck liquidity out of the market by temporarily swapping a tiny part of the holdings at the Fed (Treasuries, agency, MBS) with money held by the counterparties.

Today's operation was $1.4 billion, significantly larger than the past sub-billion reverse repos.

The stock market predictably responded, up in the early going but surrendered all the gains and some more into the negative territory. Now Dow and S&P500 are above the unchanged mark (barely) and Nasdaq very slightly negative. Overall, unchanged for the day.

(Except for gold and silver. Crooks...)

The market is already looking to another Fed day tomorrow, POMO.

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Time Magazine Blog: Will the Federal Reserve Cause a Civil War?

Almost two years ago when Obama was elected as the president of the US, I could never have imagined the day would come when a major MSM magazine would run an article that would mention the Federal Reserve and civil war in the same article.

Well the day is here. Even if it is a wimpy, wishy-washy article. And it's beyond my imagination as the author put the Fed and civil war not just in the same article but right up there on the title.

I'm not sure what the author's intent was; mocking Zero Hedge and Ron Paul supporters who bash the Federal Reserve by somehow (in his mind) tying the Fed bashing to militias, maybe. But the whole value, probably the only value, of this article is that it appeared in Time.

From The Curious Capitalist blog on Time Magazine on October 19, 2010, by Stephen Gandel:

Will the Federal Reserve Cause a Civil War?

What is the most likely cause today of civil unrest? Immigration. Gay Marriage. Abortion. The Results of Election Day. The Mosque at Ground Zero. Nope.

Try the Federal Reserve. November 3rd is when the Federal Reserve's next policy committee meeting ends, and if you thought this was just another boring money meeting you would be wrong. It could be the most important meeting in Fed history, maybe. The US central bank is expected to announce its next move to boost the faltering economic recovery. To say there has been considerable debate and anxiety among Fed watchers about what the central bank should do would be an understatement. Chairman Ben Bernanke has indicated in recent speeches that the central bank plans to try to drive down already low-interest rates by buying up long-term bonds. A number of people both inside the Fed and out believe this is the wrong move. But one website seems to believe that Ben's plan might actually lead to armed conflict. Last week, the blog, Zerohedge wrote, paraphrasing a top economic forecaster David Rosenberg, that it believed the Fed's plan is not only moronic, but "positions US society one step closer to civil war if not worse." (See photos inside the world of Ben Bernanke)

I'm not sure what "if not worse," is supposed to mean. But, with the Tea Party gaining followers, the idea of civil war over economic issues doesn't seem that far-fetched these days. And Ron Paul definitely thinks the Fed should be ended. In TIME's recently cover story on the militia movement many said these groups are powder kegs looking for a catalyst. So why not a Fed policy committee meeting. Still, I'm not convinced we are headed for Fedamageddon. That being said, the Fed's early November meeting is an important one."

The article rambles on, and you can read the rest at the link above, if you want.

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Obama Admin to Struggling Homeowners: Just Give Up

As I suspected, the Obama administration sides with the TBTF bankers in the "foreclosuregate" (or "fraudclosure").

Move along, nothing to see here. Rule of law? What a quaint idea! Just hand over your house to the bank!

From AP:

WASHINGTON (AP) -- President Barack Obama's top housing official says lenders are within their rights to resume foreclosures this month despite allegations that they erred in processing documents.

"Two big lenders -- Bank of America Corp. and Ally Financial Inc.'s GMAC Mortgage unit -- are resuming foreclosures after halting them for two weeks. The companies say they're fixing problems in legal documents used to complete foreclosures.

"Whether to restart foreclosures is a decision every lender is entitled to make independently, says Housing and Urban Development Secretary Shaun Donovan.

"We're committed to forcing institutions to change the way they conduct business," Donovan says. "We will force the changes to make sure that these types of problems don't happen again."

"These types of problems"?? Does he even know WHAT these problems are?

Sorry, Karl, it's not going to happen. The President of the United States seems very comfortable being in the deep pocket of the TBTF bankers.

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NY Fed Suing Bank of America a Damage Control? Or Worse, a "Wag the Dog" Ploy?

(UPDATE)
Adding to my already deepened suspicion, FBI is joining the fray. From AP,

Meanwhile, a federal law enforcement official says the FBI is in the initial stages of trying to determine whether the financial industry may have broken criminal laws in the mortgage foreclosure crisis.

The law enforcement official says the question is whether some in the industry were acting with criminal intent or were simply overwhelmed by events in the wake of the housing market's collapse. The official spoke on condition of anonymity because the investigation is just getting under way.

Well, shall we bother to guess which one? I bet it's of course the latter, that they were simply overwhelmed by events... They were innocent victims...

Currently, the federal government DOES NOT have control over foreclosures. State governments DO. But with the NY Fed bringing a lawsuit and now the FBI investigating, the federal government is trying to sneak in, and probably to take over the mess for yet another feds control and yet another potential bailout by taxpayers. My guess.

The feds will have to cover up; I hate to think how much crap is buried at Fannie, Freddie and FHA. (You could say their entire structure is pure crap.)

---------------------------------------------

One poster at Zero Hedge ('alien-IQ') posits:

I just realized why the FED is suing BAC (and probably all the other banks)...and it's not good.

This now becomes a Federal case and effectively shuts down all the investigations as well as all the charges being brought against the banks by the AG's of all 50 states. The AG's are more likely to seek criminal charges while the FED is more likely to cut a "bank friendly" deal.

The banks just won...again.

We have been hijacked.

The Zero Hedge article which has this comment points to a curious conflict of interest between Bank of America (who owns 34% of Blackrock) and Blackrock (who owns 5.35% of Bank of America, the largest shareholder), and concludes this putback request is nothing but diversion while they sweep the "foreclosuregate", "fraudclosure", whatever you want to call it, under the rug.

Move on, nothing to see here...

We'll see if they can get away with it this time, but if past cases are any indication, I wouldn't hold my breath.

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Putbacks! And So It Has Begun ...

to paraphrase Karl Denninger...

So "the holders of over 25% of the Voting Rights in more than $47 billion of Countrywide-issued RMBS" from yesterday's post about the link at Market Ticker turn out to be PIMCO, the Federal Reserve Bank of New York, Blacklock, and MetLife.

New York Fed??

Pimco, New York Fed Said to Seek BofA Repurchase of Mortgages
(10/19/2010 Bloomberg)

Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said.

The bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service the loans properly, their lawyer said yesterday in a statement that didn’t name the firms.

That "statement" yesterday is this.

So that's why PIMCO's Bill Gross has been buying MBS on the margin...

But New York Fed?? I guess they are very worried about the $1.2 trillion "worth" of MBS that the Fed carries on the balance sheet.

And why Countrywide? Maybe the plea bargain by Angelo Mozilo the other day has something to do with it... Some good info from Angelo to avoid jail time, maybe.

Bear Stearns, Lehman Brothers. Marked for dead. Now Bank of America?

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Stock Market Down, Time for a Fed Speak or Two

to promise us that help from the Federal Reserve is on our way. Probably on November 3, to be exact.

First, Dennis Lockhart of Atlanta Fed, from Reuters:

WASHINGTON (Reuters) - Atlanta Federal Reserve Bank President Dennis Lockhart said on Tuesday that further easing by the Fed has to be large enough to help boost demand, and purchases of $100 billion of securities a month would be a possibility.

"If we're going to pursue another round of quantitative easing, it has to be a large enough number to make a difference," Lockhart said in an interview on CNBC.

"As a monthly number ($100 billion) is fairly consistent with what we did before, and so I think it would certainly be in the range of numbers one might consider ... but if you were talking about $100 billion as simply the overall program, I think that's too small," he said.

..."I think the risks associated with it are acceptable," he said. "Quantitative easing will help improve a recovery that is going very slowly and improve the trajectory of the economy overall."

And here's Charles Evans of Chicago Fed, via Zero Hedge (they have the entire speech of Evans):

As if we needed any further confirmation that the Fed is now willing to risk an all out bout of hyperinflation, here it comes courtesy of Chicago Fed's Charles Evans, whose comments that inflation is "acceptable", and welcome, and is the only way to battle the "liquidity trap" the US finds itself in, mirror those of NY Fed's Dudley who earlier confirmed Zero Hedge expectations that $100 billion is too low a QE2 number. Which means that very soon the Fed will buy up every single Treasury in existence. It will also kill the dollar absent Europe continuing on its path from earlier today, and saying the stress test was, in fact, a lie.

Here are the highlights from the full speech presented below.

• Fed's Evans says temporarily boosting inflation may be hard pill to swallow, but potentially beneficial
• Fed's Evans says boosting inflation temporarily is an entirely appropriate strategy to escape liquidity trap
• Fed's Evans says it's likely the US in a liquidity trap, first time since Great Depression
• Fed's Evans says price-level targeting would call for series of large scale asset purchases by Fed
• Fed's Evans says sees US unemployment rate above 8% through 2012
• Fed's Evans says it would be desirable to increase monetary policy accommodation
• Fed's Evans sees US GDP growing 2%-2.5% in the second half of 2010, 3%-3.5% in 2011
• Fed's Evans says if currency forecasts hold, sees 1% inflation in 2012, and below 1.5% in 2013

Good luck with that "temporarily" thing. Also, this is where PIMCO got its 2.5% GDP leak it appears.

So rejoice, small people in America, hyperinflation is good for you. Why? Because the Federal Reserve says so. Creating demand is more important than saving and capital formation. Why? Because the Federal Reserve says so.

Who is the Federal Reserve? They are the ones who created the bubbles in the past, most recently the real estate bubble, by "accommodating" monetary policies to help us out of recessions. And they will be the ones who will control every aspect of our financial lives, thanks to the Dodd-Frank financial "reform" act.

Aren't we lucky?

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Houston, We Have a Problem...

The day Bank of America boldly announced it would resume foreclosures in the 23 judicial states also had this:

HOUSTON, Oct. 18 /PRNewswire/ --Today, the holders of over 25% of the Voting Rights in more than $47 billion of Countrywide-issued RMBS sent a Notice of Non-Performance (Notice) to Countrywide Home Loan Servicing, as Master Servicer ("Countrywide Servicing"), and to Bank of New York, as Trustee, identifying specific covenants in 115 Pooling and Servicing Agreements (PSAs) that the Holders allege Countrywide Servicing has failed to perform.

What do they demand?

the repurchase of loans that were originated in violation of underwriting guidelines, and compelling the sellers of ineligible or predatory mortgages to bear the costs of modifying them for homeowners or repurchasing them from the Trusts' collateral pools

If (big IF) those mortgages have indeed been in the Trust's collateral all these years (i.e. notes properly endorsed, assigned and delivered within 90 days of the close of the Pooling and Servicing Agreements), that is.

Maybe Bank of America announcement was a bit premature.

For more, go read the post at Market Ticker.

(h/t 'erickbacardi')

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Rush Limbaugh: Obama Looks 'Demonic'

They are rather scary photos for sure. If Drudge does not have them any more, you can take a look here. (It's too scary to show here.)

If Obama's election campaign theme is "fear", it is fitting. Or maybe Obama is doing what Edward Luce at Financial Times already suggested ("It is time for Obama to switch from hope to fear"). Maybe too literally.

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Two Different Takes on 'Foreclosuregate'

John Mauldin says "Fix the @#$% thing quick by any means available and move on. Otherwise the whole financial system will be brought down by this silly stuff! We can punish the bad guys later."

Karl Denninger says "Fraud is fraud, and unless the perpetrators [the whole financial system, actually] are brought to justice, this lawlessness will spread."

Mauldin's view is pretty much that of CNBC until a few days ago. (CNBC seems to have become more apprehensive.)

Denninger's view is also shared by Paul Krugman. There are many bloggers who are as outraged as Denninger (ex. Naked Capitalism, 4closurefraud.org).

Mauldin is a NYTimes bestselling author, recognized financial expert who makes regular appearances at big financial news media outlets.

Denninger? He was a tech guy, a system engineer.

Here's from Mauldin's latest on 'Foreclosuregate':

We CANNOT allow this debacle to continue. It will bring the system down. Who will want to buy a mortgage that is in a securitized package with no clear title? Who will get title insurance? Some judge somewhere is going to make a ruling that is going to petrify every title company, and the whole thing grinds to a halt.

Let's be very clear. If we cannot securitize mortgages, there is no mortgage market. We cannot go back to where lenders warehoused the notes. It would take a decade to build that infrastructure. In the meantime, housing prices are devastated. Whatever wealth effect remains from housing gets worse, and the economy rolls over.

This is beyond my pay grade, but there have to be some adults who can make everyone play nice in the sandbox. Ideally, someone in authority at the Treasury, with bipartisan support steps in and says everyone follow these rules, whatever these rules need to be.

...Now, that is not to say the people who did this stuff did not commit felonies and such. We can sort that out over time. The longer we wait the worse it will get. Fix the problem and then go round up the bad guys. There are bigger issues in play here.

I don't think so, Mr. Mauldin. We've done that in 2008. Are any of the "bad guys" behind bars? (Answer: No.) Has so-called "confidence" return to the stock market? (Answer: No.) Bigger issues like saving the nation's large financial institutions so that the whole financial system doesn't come tumbling down? We've done that in 2008 by extending over $10 trillion worth of support for them at the expense of small people aka taxpayers.

If we gloss over the frauds in foreclosures and securitization by "fixing it", will that revive the housing market? I'm afraid it may do the total opposite.

Here are the snippets from Denninger on the CA family who repossessed their home that was foreclosed:

...How do we wind up with someone who purchased a home for $500,000 then pulling another $500,000 in what amounts to phantom equity out?

Well, that's simple: We had Wall Street banks that were more than happy to trade on this phantom, false, and maliciously-inflated "equity", driven by a central bank and cronies in Washington DC that were all too happy to look the other way at rampant lawlessness for nearly a decade.

...This mess begins with the securitization and sale of these mortgages in the first instance. It begins with whether or not the original banks actually transferred the notes at all (there's plenty of evidence they did not) and whether the representations and warranties were complied with when these securities were sold to investors (we know in many cases - if not all - they were not, from FCIC sworn testimony.)

...We have turned a blind eye to these lawless acts for the better part of a decade - not one indictment has issued for securities fraud over these matters. And it's not just mortgages - we know banks were involved in ripping off communities such as Jefferson County, we know they are alleged to have been involved in rigging municipal debt offerings (which raised the cost of living for everyone through higher taxes) and yet not one bank officer or bank itself has been placed under indictment for any of it. Further, the FBI warned in 2004 of an "epidemic" (their words) of mortgage fraud, and instead of it being prosecuted the agents were pulled and reassigned.

We have had two sequential administrations - Bush and now Obama - that have intentionally refused to prosecute any of this lawless behavior. This refusal continues to this very day with admissions in depositions under oath of the commission of literal tens of thousands of felonies per month (each instance of falsely swearing before a court is a separate count of fraud upon the court and, in the case of "robosigning", forgery - affixing a notary's signature by other than the actual notary.) Yet despite this having been confirmed in multiple depositions going back several months not one indictment has issued thus far and Attorneys General talk about not wanting to "upset" the banks or the "economy."

...The media and others wish to spin this as "technical errors." Nonsense. These are serious crimes. They do not become "technical errors" because some large financial institution committed them. Breaking and entering is a felony irrespective of who does it - the offense does not suddenly disappear if a monster bank is the perpetrator who directs an agent of theirs to commit the offense.

The Obama administration, Timmy's Treasury and Ben's Fed are very quiet on the issue. When they say anything, it has been to discourage full discovery (Axelrod here, Timmy here). State AGs don't want to upset the big banks (see my post from Friday, toward the end).

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Bank of England to Embark on Its Own QE2

Bloomberg reports:

"The Bank of England will increase its emergency bond-purchase plan by 100 billion pounds ($160 billion) to aid the economy as the government cuts spending, the Centre for Economics and Business Research said.

"The central bank will also keep its benchmark interest rate at a record low of 0.5 percent until at least “late” 2012, the London-based group said in an e-mailed statement today. The bank kept its stimulus plan at 200 billion pounds this month.

"Britain faces the largest public spending cuts since World War II as the government tackles the record budget deficit. The British Chambers of Commerce earlier this month backed a call by policy maker Adam Posen for the central bank to expand its bond stimulus plan as recent data indicate the recovery has slowed.

"“We expect the authorities to push the monetary policy levers hard in the opposite direction to the fiscal policy levers,” the CEBR said in the statement." [The article continues. h/t 'mizesaw']

So as the UK government tries to remedy decades of resource misallocation by slashing the bloated budget, the "independent" central bank will pour in more fiat money to be freshly misallocated.

The Bank of England's quantitative easing has been done at its wholly-owned subsidiary, Bank of England Asset Purchase Facility Fund Ltd (BEAPFF), and the amount spent for asset purchase is accounted for on the Bank of England balance sheet as "loan" to BEAPFF.

The balance sheet size of the Bank of England was 223 billion British pounds as of February 28, 2010 (the latest annual report), of which 200 billion pounds were for the asset purchase by BEAPFF.

By the way, the Bank of England policy maker cited in the Bloomberg article, Adam Posen, is an American who used to work for the Federal Reserve, the ECB, the US Treasury, the US State, the European Commission, the Japanese Ministry of Economy, Trade, and Industry, the UK Cabinet Office, the IMF, the US Congressional Budget Office (he still works here). He is a member of the Council on Foreign Relations and of the Trilateral Commission. (For more of his illustrious career, go here.)

In other words, Ben and Timmy have their man inside the Bank of England. Of course the British central bank will embark on the quantitative easing again. We can't let Brits succeed in reducing the deficit and repair the damage to the economy, can we?

"We'll all go together when we go", I suppose.

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