Banks Going Under, Again

No, the Republicans are probably right. This has noooothing to do with fraud on the banks part whatsoever -

The disarray stemming from flawed foreclosure documents could threaten major banks with billions of dollars in losses, deepen the disruption in the housing market and hurt the government's effort to keep people in their homes, according to a new report from a congressional watchdog.

Revelations that several big mortgage issuers sped through thousands of home foreclosures without properly checking paperwork already has raised alarm in Washington. If the irregularities are widespread, the consequences could be severe, the Congressional Oversight Panel said in a report issued Tuesday. The full impact is still is unclear, the report cautions.

Employees or contractors of several major banks have testified in court cases that they signed, and in some cases backdated, thousands of certifying documents for home seizures. Financial firms that service a total $6.4 trillion in mortgages are involved, according to the new report. Big banks including Bank of America Corp., JPMorgan Chase & Co. and Ally Financial Inc.'s GMAC Mortgage have suspended foreclosures at some point because of flawed documents. (Emphasis mine)

The Real Effect
The banks would have you believe that this has nothing to do with fraudulent activity on their part, that they're just the poor victims of the unscrupulous housing owners that are taking advantage of them. Let's review shall we?

• Issue #1 - The banks fraudulently loaned money to parties they knew could not repay. (Subprime crisis)
• Issue #2 - They committed fraud against the deed recording agencies by knowingly transferring deeds against many state law in a complex shell game called MERS. This was to avoid paying taxes on these transfers which would have sucked out the profits on the transactions.(These are the supposed "clerical errors")
• The institutions committed loan title fraud to hide this fact by shredding documents to keep things easy and clear.
• Issue #3 - They then split the mortgages into tranches and then fraudulently sold these investment instruments to individuals and companies that used these in part for leverage to the tune of quadrillions of dollars.
• Mutual and pension funds invested in these assets believing they were solvent.
• The sellers of the securities lied repeatedly.

"It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies."
- Bank of America, U.S. Bankruptcy Court, Jacksonville, CASE NO. 3:09-bk-07047-JAF

• Issue #4 - The banks went before the Congress screaming that "The sky is falling!" and demanded the taxpayers "bail them out" via TARP. These institutions would not exist otherwise. 
• These jerks even threatened that tanks would roll down the streets if they are not rescued from their own myopic stupidity.
• The very next day, Treasury Secretary Paulson stated that he would not use these funds for that purpose. In short, he lied.
• These people are refusing to tell us where the money we are spending is going. 
• Issue #5 - The Government (FBI) knew about these abuses years ahead of time.
• Issue #6 - Individuals did not pay their mortgages in a housing price inflated environment driven in part by the fraud and further bankrupted by a Depression created by the banks?

We all know what comes next, these poor bankers (that got nice fat bonuses, again) come to us hat in hand claiming that if we don't bail them out, we're ALL GONNA DIEEEE!!! Don't buy it this time. Please.