Thursday, May 5, 2011

Best Description of the Mortgage Mess EVER

Check out this hour-long interview with William Black—in fact, listen to it twice. He explains simply and straightforwardly how the mortgage fraud was carried out:


  1. "I say this as an anti-choice, anti-welfare-state, anti-vegetable, pro-red-meat, pro-gun, pro-Catholic-Church Conservative NPR listener who is eagerly waiting for the Constitutional Ammendment that will make it legal to shoot hippies for sport."

    Fixed that for ya

  2. I found Mr. Black’s description informative, but I’m not sure I agree with the implied view that better/more regulation is needed. I suppose his bias is understandable given his professional background as a regulator. Non-enforcement of existing law is the obvious problem, combined with complex GAAP that is too easy for fraudsters to manipulate while offering obfuscation, complicating understandability and thus convict-ability.
    Thanks for sharing.

  3. If I am a scientist with lots of letters after my name, and I convince the leaders of my town that decaying pine cones are a health hazard, and I get them to approve a plan to hire people to pick up all the pine cones in the town at $50 a bucket, and buckets and buckets come pouring in, and the PCEI - Pine Cone Existence Index - says there are still many, many more pine cones that need to be picked up, and buckets and buckets keep pouring in, and it is discovered buckets of pine cones are being transported in from other towns, whose fault is it that the fraud occurred? And whose fault is it that the town has to build a new landfill because the existing one has been filled up with all those pine cones?

    It is my fault. I have betrayed the trust of the leaders of my town. I deceived them into creating the program. I provided the data for the false Pine Cone Existence Index. But I am happy, because I own the company that has the permit for the new landfill.

    There is no question that massive fraud was perpetrated in the mortgage industry. But the environment for the fraud was created by the massive amounts of money that was pumped into it. Pumping money into a system creates distortions in the system. Pumping huge amounts of money into a system creates huge distortions in the system.

    Our money system is immoral. It incentivizes private and public debt, and then dumps all of it onto the backs of those who create wealth thru work. More and more productive people are learning the truth about our immoral system. The number of people who are checking out of the system grows every day. They are teaching their children to check out, too.

    The focus on mortgage fraud is a distraction. Increased regulation in a system has already been exposed will not fix what ails us. We must eliminate the central bank. We must fix our dishonest money system. We must return to honest money.

    K Smith

  4. @ K Smith, well said. Not only have the politicians who caused this mess not been prosecuted, but most are still in positions of power. When are people going to wake up?


  5. Fannie and Freddie were at the root of this entire mess. If you take them out of the equation, banks go back to stricter underwriting. Problem solved.


  6. Those who could not understand crisis was coming,how to solve the crisis or how to understand recovery is begining?

  7. Kudos to K Smith. Centralized banking is the source of the problem(s). All else are consequences or symptoms. Just keep tracing it back. Don't stop arbitrarily at regulatory agencies, or Freddie and Fannie, or Wall Street, or anything else - keep going. Ultimately, this is where you'll end up -> End the Fed!

  8. We don't need regulators no balance budget amendments and no more "I'll be good" promises from politicians.
    At the most basic level: "Thou shall not steal".
    At the implementation level:
    1. Gold standard
    2. No Federal Reserve
    3. Fractional reserve banking outlawed under the penalty of death.
    In the near term: "the poop is going to hit the fan", there is no way out for the dollar.
    Good luck.

  9. TJ,
    Fannie and Freddie are not at the root of this mess. More and more of America, and more and more of the world, knows who is.

    Over the past 2 months the Bank of Mexico purchased 100 tons of gold. It released a statement this week saying the purchases were made "as part of the normal policy of this central bank regarding the investment and diversification of its assets."

    Translation - "Mr. Bernanke keeps cranking up the speed on the money printing machine in his helicopter. The US economy is in the ditch, with no signs of pulling out any time soon. We are jumping on the bandwagon and doing what other foreign central banks are doing, swapping dollars for gold."

    K Smith

  10. Debt Money is only a valid monetary system if the masses utilise it.
    The masses vote for government. Government support Banks. Banks control the FED. The Fed is controlled by the Elitists.
    Bernanke is the public face of the Elitists (who have the debt money).
    The blame for the mess can be shared very widely,but ultimately comes back to one root cause.
    The masses are but a leverage tool for the elitists (read ROC is multiplied ad infinitum). They are the leaches of society. They have only one motive - to increase their wealth.

    Debt money is so entrenched into the world economy that changing it would require the entire monetary system to change.
    We were on the verge of that in 2008. Now its a waiting game. Fortunately for the Elitists they have removed their capital(thanks to the FED) and now have the public debt money swishing around the globe.
    Governments of the Western world have created societies that are welfare based (read "entitlement"). This is their greatest strength.
    Voices are loud and getting louder against hubris. BUT these systems cannot be changed through the words/actions of the educated minority. There is literally the forces of gravity working against them.

    The solution - Free market and debt free money.
    How do we get there? The answer is not to be published here.
    The future is all about protecting yourself. You stand alone in a very diabolical world. Following the actions of the CB's is a start. If they control the monetary system, buying GOLD as K Smith mentions, is saying that the system is sick. Although late to the party,they realise that inevitably the fiat debt money system will fail.
    I dont believe that the system will fail but merely transform. Once the leaches have sucked the life out of the US, they will move on. A natural progression is to go where they can utilise the power of a population by corrupting them in the same way they have over the millenia.

  11. To add a point that gets ignored too often with regards to banks: Mark-to-market accounting. The banking system resists it politically because it exposes the real value of the assets they hold. Some assets are marked to market, but others are systematically not. This creates a frighteningly distorted picture of our financial system. The implications are truly astounding including the ability to incur massive losses on asset holdings and not report them.

  12. Ebag
    I think you hit the nail on the head.

    K Smith

  13. A debt based monetary system which ensures continued "prosperity" only if it is permitted to continue growing, is nuts (unless by prosperity is meant the enrichment of an elite few at the expense of the many). Cannot the men who designed and instituted the Federal Reserve in 1913 have foreseen the day when the whole system would come to a bad end, with bad results for many? Likely they did, but since it was a day far in the future and they would be long dead and buried when the SHTF, why worry. End the Fed indeed.

  14. I am not sure the 'buck stops' at the Fed. I am college educated along with all my brothers and sister yet I am the only one that 'gets it'. Why? I say religion. The rest of the clan are 'believers' and have 'faith'. I, on the other hand, am more of an Ayn Rand type (and, yes, an atheist and bldg 7 conspiracy nut to boot). Anyway, my point being that there is a reason the rest of America hasn't 'woken up'. They BELIEVE in what they hear from their 'leaders'. They have FAITH that they will look out for their interest. Otherwise, how do you explain the apathy? If it was up to me and my circle of friends, there would be a permanent guillotine out on White House lawn.

  15. Anon @2:05PM,
    Guillotines are unnecessary.

    The city of Sedgwick, Maine has told Washington and the Crony Capitalists to go pound sand. The town passed an ordinance upholding the rights of its citizens to produce, process, sell, purchase, and consume local foods, including raw milk and locally slaughtered meats. They have thumbed their noses at restrictive USDA rules that limit choice and competition and enrich the big producers.

    Georgia and Arizona have also told Washington to go pound sand. Both states have passed laws that provide for their own enforcement of immigration law. They are acting to ensure the benefits of citizenship go to citizens.

    Texas is telling Washington to go pound sand. A bill banning TSA pornoscanners that will also hold TSA agents accountable for sexual assault was unanimously approved last week by the Texas House Transportation Committee.

    Utah, the University of Texas endowment fund, and Pimco's Bill Gross have told Washington and the Banksters to go pound sand. Utah recognized gold as legal tender, the UT endowment fund has taken physical delivery of $1 billion in gold, and Bill Gross dumped all US government debt in Pimco's Total Return Fund.

    More and more people, cities, counties, states, and institutions are abandoning old, bloated, corrupt, anachronistic, dishonest institutions. They are embracing alternatives. They aren't using guillotines or any other form of violence.

    Guillotines aren't only unnecessary, they are also counterproductive. My experience and my study of history reveals violence never solves anything. It stirs up anger and animosity and focuses energy on revenge, energy that is better focused on efforts that have positive outcomes.

    Washington, the Crony Capitalists, the White House, Capitol Hill, and the Fed continue to become more and more irrelevant. Embracing alternatives that continue to make them more and more irrelevant is the most effective way to eliminate their power.

    To paraphrase General Douglas MacArthur - "Old, bloated, corrupt, anachronistic, dishonest institutions never die. They just fade away."

    K Smith

  16. A money supply that can be "fine-tuned" by some organization is not money at all. Debt money then falls under this rule. There has never been, never is, and never will be any true need to "fine-tune" the money, - all lies of thieves who want access to the store of wealth.

    Gold standard is only better than fiat money, but it isn't that good. There must be no standard, because the standard itself is what provided governments a first tool to manipulation of money - fractional banking - which is a fraud as it allows the same money to be in two different hands at once. Governments should have no right whatsoever to administer ANY aspect of economy, and first and above all, the money itself.

    Anyone, yes, anyone who poses as a wizard explaining "how it happen", and then suggests or alludes to need for regulation, is a liar with a hidden agenda. This simple rule works every time. This is how you can quickly determine someone's true motive, say listen to this speech, or that of a "Black Swan" theorist Roubini. I am sure he is paid by the FED, because at his level of intelligence, he can not possibly be so stupid as to suggest regulation.

    There is one reason it happened, - the government wanted to create a picture that the reality could no longer support.

    There is one tool it was accomplished with - universal suffrage (when paupers are allowed to make decisions on wealth they do not own). From there, you have all the rest of the evil, including FED, Regulation, etc.

  17. Why is it that public and private debt has mushroomed? Why the endless debates about the amount of regulation necessary, and who picked what loopholes?

    There is a simple solution It's called interest rates. According to the proper functions of a free market economy - which is now long gone - high levels of debt will be penalized by high interest rates. That cures the problem. Presto!

    In our current system this vital and logical connection has been completely severed by the Fed. The Fed "controls" interest rates, even if that control demands throwing the entire USA into a future of insolvency. These esteemed bankers of our land have created a financial quagmire. All of their brilliant learning is no substitute for the simple and proper function of market that determines interest rates fairly.

    One of the best suggestions that I heard came from Mike Shedlock. He suggested that interest rates should be determined directly through a free market system. That's a pretty good suggestion, and might be workable if we removed the Fed from the process and eliminated the financial leverage from any possible influence on interest rate outcomes.


  18. PeteCa,
    Your assessment of interest rates is correct.

    You may be interested to know that the Fed not only wants to continue its control of short term rates, but intends to add control of long term rates to its famous box of "policy tools" as well. Translation - "We've come up with a new way to vacuum up wealth from the working person and put it in the pockets of the banksters."

    The end game is to create new financial instruments to suck the capital out of our pensions. Our pensions will be financialized, just as home loans were financialized thru mortgage backed securities. We all know how that ended.

    The narrative is being created to convince those in academia and at high levels of public policy that our problems will miraculously be solved by permitting centralized control of long term interest rates, and by replacing the seeming incompetents at the financial helm with better dial spinners.

    The propaganda machine is being rolled out in think tanks and in the halls of academia as I type this. It is only a matter of time before we see the sales job intended for plebeians like you and me in the mainstream press, blogs, and other print and online media.

    Watch for it.

    It's coming.

    K Smith

  19. As a model, take a look at Rawles has ads from merchants who sell all kinds of disaster-related stuff, and that's where he makes his money -- along with sales of his preparation courses and novel (also preparation-related). As someone who has been a "prepper" for a while, the difficult thing is to know what to prepare for. Is it TEOTWAWKI, with MZB's (mutant zombie bikers) in the streets, or is it rolling power blackouts, lots of street crime, and incredibly high food prices? Will we have to bug out or bug in? Will we be fighting over the few remaining cans of food, or will we just be unable to afford much? This is where I believe you can be useful and provide value to your readers.

  20. You may be serious to know that the Fed not only wants to proceed its management of quick prices, but wants to add management of lasting prices to its well-known box of "policy tools" as well. Interpretation - "We've come up with a new way to clean up success from the significant man or woman and put it in the purses of the banksters."Runescape Gold Cheap Tera Gold


Whether you agree with me or not, thank you for your comment.

If you liked what I wrote—or if it at least made you think—don’t be shy about making a payment. The PayPal button is there for your convenience.

If you have a question or a private comment, do feel free to e-mail me at my address