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IPFS News Link • Housing

Foreclosure-Gate: Yet Another Attempt To Bury Fraud

This is government for you - first, we have a bad thing that happens. Then, we do our level best to make sure that the people who get screwed as a consequence don't have the ability to recover their economic harm from those who (perhaps) did the screwing or were responsible for the screwing occurring, even if they weren't the parties who did the evil them themselves. In fact, we always seem to find some way to keep the people from having their day in court, especially when it comes from something like this - where someone "important" was the screwer or the complicit party (and you, the ordinary citizen, were the screwee.) Second, Bair's FDIC, like the FDIC before she was there, has done its level best to exceed its responsibility and mandate under the law, protecting those who funded the evildoers. See, the FDIC's responsibility is to depositors. But it is the bailing out of bondholders, which is NOT part of the FDIC's mandate, that in point of fact led to this crisis in the first place. The FDIC has a history of this, going all the way back to Continental Illinois. If the FDIC had not bailed out bondholders - not in the 1980s and certainly not now, the bondholders would have been a whole lot more careful about who they lent their money to, and would have taken their just turns as screewees when they failed to do their diligence with regard to the practices of the companies they were funding. And where does the FDIC get the authority and mandate to bail out bondholders? Nowhere. The FDIC's mandate is to insure depositors, not bondholders. In point of fact "Prompt Corrective Action" mandates that The FDIC, along with the other regulators, seize and close banks before their capital reserves go below zero - that is, before there can be a loss to depositors. The FDIC has wantonly violated the PCA mandates on a repetitive basis, of course. The loss ratios reported by the FDIC prove this, in that the record shows that the organization repeatedly accepts, along with OTS and OCC, alleged "asset valuations" that just weeks or months later prove to be wrong by as much as half. Of course that's fairly strong evidence that there was actual fraud involved in the original valuations. You'd think after all these seizures, that crap would have stopped and criminal indictments would be issued. You'd also think that a very-jaundiced eye would be turned to the big banks and their claimed asset valuations, as if just one of those institutions blows it will take down the FDIC - and possibly Treasury. You'd be wrong, of course. And now Bair is out again trying to bury the truth.