Taxing Wall Street Down to Size: Litigation Guidelines

Posted on January 20, 2010 by LivingLies dot WordPress dot com

The
mistake I detect from those who are not faring well in court is the
attempt to treat preliminary motions and hearings as opportunities to
prove your entire case. Don’t talk about conspiracy and theft, talk
about evidence and discovery.

Every
debtor is entitled to know the identity of the creditor, the full
accounting for the entire obligation and all transactions arising from
the transaction, and an opportunity to comply with Federal and State
law requiring attempts at modification and/or mediation or settlement
with the real parties in interest.


The banking system has become an agent of
destruction for the gross domestic product and of impoverishment for
the middle class. To be sure, it was lured into these unsavory missions
by a truly insane monetary policy under which, most recently, the
Federal Reserve purchased $1.5 trillion of longer-dated Treasury bonds
and housing agency securities in less than a year. It was an
unprecedented exercise in market-rigging with printing-press money, and
it gave a sharp boost to the price of bonds and other securities held
by banks, permitting them to book huge revenues from trading and
bookkeeping gains.

Editor’s Note: Stockman notes the myth (lie)
that “a prodigious upwelling of profitability will repair bank balance
sheets and bury toxic waste from the last bubble’s collapse.” He
questions whether the “profitability” will be there. I don’t question
it, I know it — both for the reasons he cites and because the reality
is that at least certain institution “in the loop” have tons of money
and profitability “off-balance sheet” and I might add, off-shore.

According to published reports, Wall Street is
“taxed” on this gorging of money at the rate of 1% while some poor
bloke earning $80,000 is paying 16% just for social security, directly
or indirectly. Fix the budget, cure the deficit? There it is!

The current profits reported, and the bonuses
that come along with them, are being attributed widely in the press to
the give-away of the federal reserve is letting them borrow at zero
rates and then giving them a much higher rate for money held on
deposit. While this is true all it really describes is the cover the
laundering the plunder of $24 trillion back into the system where it
will be moved around again producing more fees, more “profits”, and
greater “liquidity” (proprietary currency).

The significance of this cannot be understated for the foreclosure litigator.
We have the SEC in a 10 year confidentiality agreement with AIG so that
the bailout and payment to counter-parties is being kept secret while
the foreclosures proceed on obligations that have been paid in full,
sometimes thirty times over. And we have the treasure
trove “off-balance sheet” that was created by a secret undisclosed
yield spread premium that should have investors, borrowers, and the
regulators screaming
.
This second YSP as described recently in
this blog, dwarfs any other fees, profits or other revenue or capital
made during the creation stage of the mortgage mess.

The job of
the litigator is to pique the interest of the judge enough to allow you
to inquire about a FULL ACCOUNTING from the CREDITOR who is positively
identified. Don’t ask the Judge to buy into the whole conspiracy theory
aspect of the mortgage meltdown. He or she is not there to listen to
“fiction.”

Just use your expert to prove there is an
absence of facts and numbers such that the full accounting from debtor
through creditor is not present and that under the most basic of
premises, every
debtor is entitled to know the identity of the creditor, the full
accounting for the entire obligation and all transactions arising from
the transaction, and an opportunity to comply with Federal and State
law requiring attempts at modification and/or mediation or settlement
with the real parties in interest.

The
mistake I detect from those who are not faring well in court is the
attempt to treat preliminary motions and hearings as opportunities to
prove your entire case. Don’t talk about conspiracy and theft, talk
about evidence and discovery.

Don’t ask the Judge to accept the idea that
all these big name banks and other entities are thieves or interlopers,
ask the Judge to accept the premise that you have alleged that the real
creditor is not present, not represented, and that this action is in
derogation of that creditor. Talk about your attempts to identify the
creditor (investors) and the stonewalling you have received. Talk about
your attempts to get a consistent complete accounting for the
obligation and your inability to get it.

TALK ABOUT YOUR ATTEMPTS TO FIND AN ACTUAL
DECISION MAKER (CREDITOR) WHOM YOU COULD SPEAK WITH AND ATTEMPT
RECONCILIATION, MODIFICATION OR SETTLEMENT. 

January 20, 2010
Op-Ed Contributor

Taxing Wall Street Down to Size

By DAVID STOCKMAN

WHILE supply-side catechism insists that lower taxes are a growth
tonic, the theory also argues that if you want less of something, tax
it more. The economy desperately needs less of our bloated,
unproductive and increasingly parasitic banking system. In this
respect, the White House appears to have gone over to the supply side
with its proposed tax on big banks, as it scores populist points against the banksters, too.

Not surprisingly, the bankers are already whining, even though the
tax would amount to a financial pinprick — a levy of only 0.15 percent
on the debts (other than deposits) of the big financial conglomerates.
Their objections are evidence that the administration is on the right
track.

Make no mistake. The banking system has become an agent of
destruction for the gross domestic product and of impoverishment for
the middle class. To be sure, it was lured into these unsavory missions
by a truly insane monetary policy under which, most recently, the
Federal Reserve purchased $1.5 trillion of longer-dated Treasury bonds
and housing agency securities in less than a year. It was an
unprecedented exercise in market-rigging with printing-press money, and
it gave a sharp boost to the price of bonds and other securities held
by banks, permitting them to book huge revenues from trading and
bookkeeping gains.

Meanwhile, by fixing short-term interest rates at near zero, the Fed
planted its heavy boot squarely in the face of depositors, as it shrank
the banks’ cost of production — their interest expense on depositor
funds — to the vanishing point.

The resulting ultrasteep yield curve for banks is heralded, by a
certain breed of Wall Street tout, as a financial miracle cure. Soon,
it is claimed, a prodigious upwelling of profitability will repair bank
balance sheets and bury toxic waste from the last bubble’s collapse.
But will it?

In supplying the banks with free deposit money (effectively,
zero-interest loans), the savers of America are taking a $250 billion
annual haircut in lost interest income. And the banks, after reaping
this ill-deserved windfall, are pleased to pronounce themselves
solvent, ignoring the bad loans still on their books. This kind of
Robin Hood redistribution in reverse is not sustainable. It requires
permanently flooding world markets with cheap dollars — a recipe for
the next bubble and financial crisis.

Moreover, rescuing the banks yet again, this time with a steeply
sloped yield curve (that is, cheap short-term money and more expensive
long-term rates), is not even a proper monetary policy action. It is a
vast and capricious reallocation of national income, which would be
hooted down in the halls of Congress, were it properly brought to a
vote.

National economic policy has come to this absurd pass because for
decades the Fed has juiced the banking system with excessive reserves.
With this monetary fuel, the banks manufactured, aggressively at first
and then recklessly, a tide of new loans and deposits. When Wall
Street’s “heart attack” struck in September 2008, bank liabilities had
reached 100 percent of gross domestic product — double the ratio of a
few decades earlier.

This was a measurement of the perilous extent to which bad
investments, financed by debt, had come to distort the warp and woof of
the economy. Behind the worthless loans stands a vast assemblage of
redundant housing units, shopping malls, office buildings, warehouses,
tanning salons and fast food restaurants. These superfluous fixed
assets had, over the past decade, given rise to a hothouse economy of
jobs that have now vanished. Obviously, the legions of brokers,
developers, appraisers, contractors, tradesmen and decorators who
created the bad investments are long gone. But now the waitresses, yoga
instructors, gardeners, repairmen, sales clerks, inventory managers,
office workers and lift-truck drivers once thought needed to work at
these places are disappearing into the unemployment statistics, as well.

The baleful reality is that the big banks, the freakish offspring of
the Fed’s easy money, are dangerous institutions, deeply embedded in a
bull market culture of entitlement and greed. This is why the Obama tax
is welcome: its underlying policy message is that big banking must get
smaller because it does too little that is useful, productive or
efficient.

To argue, as some conservatives surely will, that a
policy-directed shrinking of big banking is an inappropriate
interference in the marketplace is to miss a crucial point: the big
Wall Street banks are wards of the state, not private enterprises.
During recent quarters, for instance, the preponderant share of Goldman
Sachs’ revenues came from trading in bonds, currencies and commodities.

But these profits were not evidence of Mr. Market doing God’s work,
greasing the wheels of commerce and trade by facilitating productive
financial transactions. In fact, they represented the fruits of
hyperactive gambling in the Fed’s monetary casino — a place where the
inside players obtain their chips at no cost from the Fed-controlled
money markets, and are warned well in advance, by obscure wording
changes in the Fed’s policy statements, about any pending shift in the
gambling odds.

To be sure, the most direct way to cure the banking system’s ills
would be to return to a rational monetary policy based on sensible
interest rates, an end to frantic monetization of federal debt and a
stable exchange value for the dollar. But Ben Bernanke, the Fed
chairman, and his posse are not likely to go there, believing as they
do that central banking is about micromanaging aggregate demand — asset
bubbles and a flagging dollar be damned. Still, there can be no doubt
that taxing big bank liabilities will cause there to be less of them.
And that’s a start.

David Stockman, a director of the Office of Management and
Budget under President Ronald Reagan, is working on a book about the
financial crisis.

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: , , , , , , , , , , , , , ,

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