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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Friday, January 15, 2010

WE THE PEOPLE (Have Had Enough)

This is my first and probably only off topic post but something HAS to be done or the good ole' USA will not survive, at least not in the way people think of it.

From Karl over at market-ticker:

THE seminal question for this year - coming into the mid-term elections - is exactly that.

Have you had it?

Are you tired of being bent over the table with 29.9% credit card interest rates while these big banks borrow at zero from The Fed and use that money to speculate in the markets?

Are you tired of "too big to fail" - better stated as heads we (the banksters) win, tails you (the taxpayer) lose?

Are you enraged beyond words with the fact that this economic mess was not an accident - it was an intentional act of willful blindness and perhaps even fraud?

Do you feel helpless to do anything about the fact that Government has willfully and intentionally refused to both clean up the mess and prevent it from happening again due to the presence of huge lobbying interests in Washington DC - paid for by the very same banksters who nearly destroyed this nation?

Do you realize that we have fixed nothing - the bad loans are still there, they are still bad, that millions of Americans have lost their jobs, that the economy is not actually recovering (despite what they say) and that without resolving the actual problems odds are that within a few years, and perhaps within a few months, we will face another crash - this one likely bad enough to destroy our economy and perhaps our government?

Let's look at the facts.

  • The testimony being put before the FCIC - the investigatory panel charged with looking into how the housing and foreclosure mess came about, and how our economy was stripped clean by the vultures that infest the banking business in this nation is a matter of record. I, and others, have been documenting this for more than two years. READ THE MISSION STATEMENT AND TESTIMONY OF PEOPLE LIKE MIKE MAYO.

  • THE FBI has been warning of an "epidemic" of mortgage fraud since 2004. The banks knew this. Indeed, in 2004 their lobbyists convinced The Bush Administration to SUE to prevent state regulators from protecting YOU, THE CONSUMER, from predatory and unfair loans.

  • Since 2006 there have been published stories that stated income loans were laced through-and-through with fraud:
    One lender recently compared 100 stated-income loans with the borrowers' tax returns and found that only 10 of the borrowers were telling the truth about their wages, according to Mortgage Asset Research Institute, a division of data firm ChoicePoint Inc. (September 2006)

  • The Wall Street and large commercial banks did not include these disclosures in their offering circulars for securitized debt.

  • Wall Street entities knew they were at risk but bought "protection" (CDS, or "credit default swaps") from firms who they knew or should have known could not pay, including but not limited to AIG. This "allowed" them to consider assets they knew or should have known were rife with fraud as "money good".

  • Wall Street and "big lender" loan programs in the housing market during the years 2000-2007 all "assumed" that house prices would rise forever at a rate higher than inflation. The key point is that even if they had, which is mathematically impossible, it doesn't change the fact that the borrower, that is you the citizen, still was going to lose their house when they reached the limit of their borrowing capacity. The bank's only concern was designing a program that they would be protected by - not whether it was suitable for you nor whether you would have (or continue to have) a home.

None of this was a "mistake" or an "accident". It was not an "unforseen event."

Government agencies were aware of and sounded the alarm as early as 2004. Brooksley Born, chair of a federal regulatory agency (the CFTC) raised hell on complex derivatives ("CDS" and similar instruments) in 1999. She was attacked by everyone in the banking industry including Alan Greenspan and literally run out of town. She was right.

The banking and Wall Street institutions, through a combination of the above, "made" billions of profits that never really existed. They then paid that money - money that didn't actually exist AND NEVER WOULD - out in bonuses, dividends and stock price appreciation.

Starting in 2007, it all came apart, first with two hedge funds at Bear Stearns, then Bear Stearns itself, then Fannie Mae, Freddie Mac, Lehman Brothers and AIG.

In the fall of 2008 Ben Bernanke and Henry Paulson, Chairman of The Fed and Treasury Secretary (who had refused to heed the warnings of the FBI and others for the previous four years) corralled a bunch of Representatives and Senators in The Capitol. We were told that the government "had to bail out the banks" to prevent the financial system from collapsing. By anywhere from 100:1 to 300:1, the American People said "let 'em burn." The government refused once again to listen, and together with The Federal Reserve propped up the banks instead of forcing them to eat their own cooking. Rather than use the money appropriated to force these institutions through bankruptcy and shut them down, paying off the depositors that were insured, these failed institutions were instead mish-mashed together into even bigger financial companies and then given government backstops.

Nothing has been fixed.

The bad debt is still there.

Unemployment has skyrocketed, the banks have cranked up credit card interest rates to 29.9% and are feasting on zero interest Federal Reserve money which they use to speculate in the financial markets, paying out well over $100 billion in aggregate in bonuses for the last year.

We are told this is and was "necessary."

I might accept that - if it came with the closing of all of these institutions. Each and every one of them. If it came with the permanent barring of every executive involved from ever serving as so much as a janitor in any financial institution - worldwide - ever again. If it came with a full forensic audit of each and every one of these institutions and officials by the FBI, with every instance of fraud that was uncovered presented to a grand jury.

But it has not.

Instead, firms like Countrywide Financial and Washington Mutual were absorbed into Bank of America and JP Morgan/Chase. Those who were "too big to fail" not only were not dismantled, they were made bigger and more powerful.

Wall Street may effectively own Washington DC and the politicians but they do not own us.



WE THE PEOPLE have the freedom to associate - or not.

WE THE PEOPLE have the right to demand legal tender in payment of debts owed us.

WE THE PEOPLE have the right to demand that these institutions eat their own cooking on each and every one of the loans they securitized and peddled during these years without fair and full disclosure to the buyers that these loans were rife with fraud.

WE THE PEOPLE have the right - and the ability - to take personal, lawful action with specific, lawful political and business-oriented goals, including permanent structural changes that will end "too big to fail" and "rip off the consumer on demand" policies, including the full reinstatement of Glass-Steagall which will END financial speculation and dealing in all of its forms by firms that have access to Federal Reserve credit and/or any sort of public backstop.

In the coming days and weeks I will outline specific, lawful actions that I hope each and every financial blogger, writer and columnist will take up and push as the key item for the remainder of this year and, if necessary, beyond - all with the intent of accomplishing these goals.

I invite all financial bloggers, mainstream media writing or broadcasting on the financial markets and products and interested politicians to contact me at "karl starve-the-beast org" with the explicit purpose of joining an effort to formulate cogent and real, tangible yet lawful actions that can effect positive and necessary change. Further posts to The Market Ticker will be made under the Category "Starve The Beast" - so you can find them all in one place.

Make this message - this post - viral. Send it to your associates. Send it to the media. Send it to politicians. Get involved and do it now.

The opportunity is now and our responsibility is clear. We either accept that responsibility and act or we are consenting to serial asset bubbles and ever-larger detonations, with the very real risk that the next one destroys our political and economic system both in the United States and beyond.


Anonymous said...

I believe some people fudged their numbers but HOW was that allowed to happen? I can remember when they traced the monies in your bank accounts to verify your financial condition....most people were coached through these who? Hmmm...

Jamie Dimon today referenced consumers ability to pay....ahhh,,,but in a recession/ can your income keep up to easier times? they can't....Hmmm. another way to shift blame on consumer from industry...

I'd like to know how much juice these loans have squeezed out of people....why not reduce the loans by the juice paid and reamortize at lower rate and longer term? It was a crisis they drastic times need drastic measures for all parties not just so the banks can give out their bonuses...

then go back to an industry standard on mortgage originations!

listen to saluzzi stop drinking the kool aid....

Joe Saluzzi Refuses To Drink The Economic Kool-Aid

Some more macro observations from Joe Saluzzi: Last "Friday's stock market was the biggest tell: when you saw an unemployment number come out like that, that tells you what an absolute joke the stock market is, and how it's a lagging indicator, not a leading indicator of what's going on... When you're in the basement you can't stay in the basement, you have to walk up the stairs to get out. We aren't walking up the stairs, we just stopped walking down the stairs... a $77 Estimate on the S&P, you are looking at a 15x forward multiple on that earnings, yet you are in an economy which is closer to the 80's which deserves a 10x P/E. Why do you give it a 15x P/E?... If California was a public corporation they would be the next Lehman Brothers: that's how bad this thing is. The government is saying 'We're not going to bail you out California.' We're they going to come out with the $9 billion that they owe?"

Yet nothing deters the Bloomberg Kool-Aid brigade.

Anonymous said...

Have you ever watched Dicken's Great Expectations..the movie

Do you remember when the privileged Estella called the plebeian Pip a stupid boy...this is basically the same thing only it is directed at the working class..

Wall Street Thinks You Are a Jealous Little Malcontent

The recurrent theme on Bloomberg television today, from the guests that are brought on and questioned by the news anchors, is that the public wants to limit the bonuses paid by Wall Street because they are just jealous and stupid.
I would not call it jealousy or a need for retribution. I would say that the people as a whole have a sense of right and wrong, a sense of fairness and balance, a sense of outrage that is being held in check by patience, but wishes to see justice done for themselves and their children, because it is the right thing to do.

Anonymous said...

Robert M,

glad to see you pick this up. I've posted it around a few times myself. We really do need to stick together, work together, and figure out some concrete ways to DO SOMETHING.

Has anyone considered grouping all of the anti-bailout blogs under one, single "organization" whose name we can all use whenever we talk to congress people, to the media, etc?

No or something like. Just so we can be, and appear to be, a coherent movement, rather than a rag-tag collection of malcontents.


And what about the actual bloggers (like Karl, like Mike Morgan and yourself, like the guys at The Daily Bail, etc.) actually meeting up face-to-face and making some definite plans?

Personally, I suck at organizing, but I can see that this movement needs organization beyond the individual blogs. What Mike has done here is impressive. Likewise Steve at The Daily Bail. But these are relatively small groups that can be dismissed as such.

James H

Larry Rubinoff said...

James: thanks for you comment and for visiting.

I recently wrote on how blogs fill a large void that the major media won't address. I said in the post that while there are so many bloggers out there - like us - to bring truth to the public, the effort is splintered.

Just the other day I was thinking about a unified effort as well. I believe it is something that could happen as bloggers begin to communicate with one another through comments and contacts.

There are other movements out there. One way to begin unification is to have links as we do and as others do. Eventually it may all come together.

This nations problems are great and it will take the people to unify to correct them.

Keep reading, commenting and sharing. As I say above in our disclaimer, "Together We Can Make A Difference".

If you would like to join us as a volunteer please contact me at

Richard Cook said...

There are rumors that the Justice Department is preparing 5000 indictments of financier fraudsters. Anyone know if that is true?

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