The Daily Caller vs the banks

By Felix Salmon
October 15, 2010
Joseph Tauke has a monster 5,600-word excoriation of the mortgage industry.

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Joseph Tauke has a monster 5,600-word excoriation of the mortgage industry. It’s a great read, and it includes a lot of information you probably won’t know unless you’re a regular reader of Naked Capitalism and 4closureFraud. But the most important thing about the story is nowhere to be found in the story itself; rather, it’s the fact that it was published by the Daily Caller, Tucker Carlson’s right-wing website.

The Tea Party wing of the Republican party has never been a big fan of Wall Street, of course. But at the same time, it has also tended to oppose any Democratic attempts to bring Wall Street into line. And it hasn’t made bank-bashing a central part of its platform at all. (TARP-bashing, yes. But TARP was a government program.)

TARP was a bipartisan deal to save the banks, and its outcome is now regarded as desperately unfair: the rich bankers are now back to making multi-million-dollar bonuses, even as most of the country continues to suffer from a weak economy and high unemployment.

So if the Daily Caller’s story is any indication, there might just be a consensus in Congress to gang up on the banks and dole out a bit of punishment for their fraudulent behavior with respect to respectable homeowners.

The big question mark with regard to foreclosure fraud has always been the willingness, rather than the ability, of authorities to prosecute the banks involved. If the political winds change so that regulators have every incentive to sue, you can be sure that they will do so. Given that any indication of friendliness towards banks constitutes political suicide right now, I’d guess that the banks’ litigation risk is higher than it has ever been.

Which is maybe why JP Morgan Chase set aside $1.3 billion in additional litigation reserves last quarter. At this rate, they might well need all of that — and more.


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and herein lies the political conundrum – they NEED to go after the banks to win the election, but if they do, they’ll then have the problem of TARP 2.0 being needed… no one wants that!

Of course, there’s another solution – go after the banks, and bankrupt them for the phantom note MBS problem (if it is indeed a widespread problem)… does anyone view that outcome as highly likely? ($1.3B won’t cover it!)

Posted by KidDynamite | Report as abusive

There can be no tarp 2. The people will tear the banks down brick by brick before that happens again.

The banks created the monster. Why should tax payers again be on the hook to bail them out?

Posted by hsvkitty | Report as abusive

Perjury is a state offense. Congressional action is not needed to put these banks into hot water. The Ohio AG has more than enough already to kick GMAC, alias “Ally,” out of the state. Maybe this makes me an old timer, but I remember a US President who got impeached for perjuring himself. It isn’t a “paperwork glitch.”

Posted by johnhhaskell | Report as abusive

johnhhaskell, the Obama bashers are just that. How do you manage to blame systemic corruption on one person?
Do you really think that by bringing down a President would bring stability, when it is bank greed and lack of ethics and respect for law that caused this?

THE USA needs to have an ethics taught in schools, because even the Robosigners are at fault for not knowing any mumbo jumbo legalese, such as what the term mortgage means, and for signing forged documents in other people’s names, when documents clearly state they are signing that they read all of the documents pertaining to the foreclosures. The banks hired people to forge… so do you throw them all in jail. (I say yes, there are people in jail who did less)

Felix, when I read the story , it was difficult to see any partisanship, because it was a bank bashing article. What I saw it was an indepth compilation of what I had been reading on many sites and I felt as though I was reading the truth. Is it a sign of things to come?

There does have to be a time when both sides come together for the people, because that is who vote them into office and who they are to be working for, but as we all know the money talks and lobbyists are what keep so many dishonest.

They did have a consencus…3808, the bill rushed through senate and congress even though it had been languishing for years. (BTW johnhhaskel, it is not passed yet as the President refused to sign and it was sent back)

“Interstate Recognition of Notarizations Act of 2010” doesn’t read likea fix. Perhaps because the notes had been electronically generated and traded around the cyber world, this act seemed like a good idea. (or perhaps was written to make a loophole? hopefully not)

I suppose if an electronic copy of the original note was given a dispensation for trading hands and felicitate trades, then they were probably going to make it stick as a fix, but how? It needed a signed notary and seal… Oh yeah… so did some of the other forged documents… .xpd?bill=h111-3808

Posted by hsvkitty | Report as abusive

If you read nothing else of Joseph Tauke’s piece, read his last paragraph:

“It gets worse. The equally-infamous credit-default swaps that bankrupted AIG will come roaring back with a vengeance as the foreclosure process grinds to a halt. Credit-default swaps are financial instruments called derivatives, which are assets with values determined by other assets. WHEN A MORTGAGE ISN’T REALLY A MORTGAGE, A DERIVATIVE BASED ON THAT MORTGAGE IS SUDDENLY CALLED INTO QUESTION. Banks own trillions in derivatives. They also own derivatives of derivatives. Amazingly, they even own derivatives of derivatives of derivatives. The total dollar value of all derivatives in the American financial system is listed by the Office of the Comptroller of the Currency at an absolutely incomprehensible $233 trillion. And much of that will simply vanish into thin air, crashing major banks into the ground.”

Can THIS be the real reason DOJ isn’t moving on fraudulent FC issues? Better to keep on screwing homeowners and destroying the middle class than crash the system.

Posted by MichelDelving | Report as abusive

Last paragraph of the Tauke piece — “The total dollar value of all derivatives in the American financial system is listed by the Office of the Comptroller of the Currency at an absolutely incomprehensible $233 trillion.”

Does the Comptroller of the Currency really confuse notional value with actual dollar value, or is it Tauke?

Posted by comment1 | Report as abusive

Hi there. I’m Joe Tauke, so I would probably be the best person to answer your question. The Comptroller of the Currency only lists what banks will owe if the derivatives are activated, which is 233 trillion dollars. Those derivatives will be activated. All that’s left is the court system’s willingness to activate them, because courts, up until this point, have been acting quite stupidly, and I intend to highlight this in my next piece, which will examine why judges have been saying quite extraordinary things like, “Well they owe someone, don’t they?” to proceed with foreclosure cases that would force homeowners to pay not “someone,” but a particular bank, in order to keep their homes.

The derivatives will be activated. I just want to tell you why. Courts won’t keep acting this way forever, and when they stop, that will make the derivatives very, very important.

Posted by joetauke | Report as abusive