America Committing Suicide by Stupidity
brad | 06 October, 2009 09:39
Thank you Lehman, Bear Stearns, Citi, Bank of America... for THE Credit Default Swap Mess and...
The demise of the dollar
This is oil politics at its best but it is made 1000 times worse by the inept greed hoisted on the globe by America's foolish Wall Street Bankers.
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
Tuesday, 6 October 2009
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."
This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.
The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.
Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.
China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.
Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.
Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.
The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."
Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.
The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.
"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.
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Trackbacks (0)Subprime Defaults Double.. Over 60% of Those Files Contain Substantial Fraud
brad | 06 July, 2009 20:31
Standard & Poor’s raised expectations for losses on Subprime mortgage securities tied to exotic mortgages. Mortgage Backed Securities (MBS's) backed by non-conventional loans have been downgraded substantially in recent weeks. The latest downgrades are a result of declines in market value of the debt and large increase in evident fraud in the files along with the fresh wave of increasing number of defaults.
Standard and Poor expects the default rate on subprime mortgages issued in 2005, 2006, and 2007 to be the worst of the worst. These were the three years that had the most untrained and unqualified loan officers in the business with the least government oversight and regulations.
Securities tied to these types of loans are selling for just pennies on the dollar, as they’re now valued based only on remaining interest payments that may be collected.
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Trackbacks (194)Taylor Bean Pays $9 Million but Wells Should Pay $100 Million
brad | 27 June, 2009 08:51
Fannie Mae, Freddie Mac, Wells Fargo and Countrywide skate away while a smaller lender with very little government influence is severly penalized.
Taylor, Bean and Whitaker a large national lender has settled with mortgage regulators in Arizona, Washington DC, Florida, Georgia, Idaho, Illinois, Louisiana, Maryland, Massachusetts, Mississippi, New Jersey, North Carolina, Pennsylvania, and Vermont. over lending practices tied to non-conformation loans originated several years ago.
Taylor, Bean & Whitaker Mortgage Corporation will pay $9 million to help the below states oversee mortgage origination practices in part by helping to fund the National Mortgage Licensing System. Exotic loans were the cause of this penalty / TAX. The loan programs in question were interest only loans, option arms and stated income loans.
Allegedly the company allowed borrowers and loan originators to make second or third applications for borrowers that had been declined through the conforming loan channels. When borrowers couldn't get approved using traditional programs, the borrowers information was then reworked and they were able pass through the system under non-traditional or low documentation loans.
It saddens me that the States and Federal government don't have enough courage to take on the biggest culrprits of this cancer. One of which is Wells Fargo. Wells Fargo had falsified 100's of 1000's of re-apps for years. See our story on greenlining mortgages.
Company's such as Wells Fargo and Countrywide to name the largest and worst abusers, RE-originated mega-tons of non-traditional mortgages only after the loan application was declined for tradtional underwriting. Sadly, Wells Fargo won't be accused because of their connection to Warren Buffett as a large shareholder and Obama advisor.
Let's look at Wells Fargo for instance. In the greenlining example above, Wells Fargo created 1000's of joint ventures accross the country in every state under many ficticious business names. Wells, prior to 2008, would 'originate' a traditional loan in their computer system often through their DBA channel which were usually joint ventures with real estate brokerage firms. These 'A' paper loans were primarily Freddie Mac loans, submitted to Freddie Mac electronically through their software. If the loan was declined, loan officers in the Wells Fargo channel were requested and allowed to rework the loan application and broker it out to other entities that were toxic enough to swallow the poison: New Century, First Franklin, Equifirst, Countrywide, Etc.. all out of business now.
Large companies like Wells Fargo knew exactly what was happening and fostered it.
It would not be hard at all for a common regulator to prove this fact because all of the origination information is in their point of origination software and was uploaded to Freddie Mac (which also knew what was going on).
Fannie Mae was Countrywides partner in crime.
The proof is there, the honesty and courage of the regulators isn't
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Trackbacks (209)Are African-Americans Avoiding Their Credit Responsibilities?
brad | 29 May, 2009 07:43
I had felt the pain of Subprime borrowers but didn't know the problem was so wide spread until I attended a credit repair event. Seemingly, the cost of credit is being raised disporportunitly by a single minority group- African-Americans.
More complaints surfaced during conversations I had with mortgage professionals at this recent credit repair event. An owner of a brokerage shop voiced frustration to the goup that the cost of her credit reports had shot through the roof. One loan officer from her company quietly quipped to me that if you want to save money "don't run credit on black folks, most are below 580".
I asked more questions to find out why mortgage broker and banker associates might complain about the credit scores of African-American borrowers. The general complaint was that African-American loan applicants were disporportionately credit abusers and that they were too aggressive about accepting credit when it was offered.
It seems that the majority of African-American applicants routinely have scores that are far below minimum standards required by mortgage companies. The problem is so severe that it could be considered a credit pandemic. These are credit scores that are not difficult to maintain such as the new 620 fico minimums for FHA home loans.
Dr. Rickie C. Keys, PhD, MPH, of the University of Denver Center for African-American Policy, conducted the study which found that: The 130-plus million Americans lack prime credit scores (also the unbanked and underbanked) are disproportionately African-American and Hispanic. A copy of the report is available at the University of Denver’s www.blackpolicy.org website.
After questioning more loan officers (purely unscientific) I found that other minorities (other then African-Americans) typically avoid credit whenever possible. Some of these minorities appear on demographic studies as underserved but when you look deeper, these studies don't clarify the root habits within the groups.
Much of what I found reflected credit mismanagement: African-American and Hispanic households are at greater financial risk and more likely to be in credit card debt than their white counterparts, according to a new report, Costly Credit: African Americans and Latinos in Debt, released today by the Economic Opportunity Program at Demos, a leading national, non-partisan public policy and advocacy group. The report analyzed and compared credit card debt and the forces driving credit card reliance in three ethnic/racial groups: African Americans, Hispanics and whites.
Is this type of credit abuse and mismanagement bringing the rest of the country to its knees?
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Trackbacks (0)To Hell With Subprime Credit Borrowers !!
brad | 24 April, 2009 14:15
I just had to write this article and vent to you all. Hopefully some of you will understand what I'm experiencing.
A borrower walked in to my office and dropped off some credit information for me to deliver to the credit repair company (as a favor to her). Credit repair is something we just started a few months ago to see if it would help in this market. It has turned out to be more of a social awakening rather than a revenue generator.
The lady that dropped off her credit information was such a "piece of work" from day one. It seems that everyone she owned money to had a "problem" and it often was THEIR fault or THEIR problem. She's unappreciative of the efforts and petty about it. To top it off she's a "bible thumper". I have to despise people like this because they give faithful people a bad name.
Recently I've delt with a steady stream of credit repair customers and it seems that the majority of them are fairly useless people. They are lazy when it comes to getting their information to the credit repair person, they bounce checks and often try to coax you into their scam.
I wish there was a way that these people could break rocks for the rest of us because I'm really tired of paying for their health care collections, bailing them out of their foreclosures, having to listen to their excuses and offended by their requests.
They should all go to HELL.
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Trackbacks (0)Obama Pulling All The Right Levers
brad | 11 April, 2009 11:52
President Obama will host a roundtable discussion this morning (April 9th) in the Roosevelt Room about the impact of historically low interest rates. Attending the meeting will be a handful of households who have re-financed their homes and benefited from lower mortgage payments, as well as members of President Obama’s economic team.
Our Financial Stability Plan will address the key problems at the heart of the current crisis and get our economy back on track. A critical piece of that effort is Making Home Affordable, a plan to stabilize our housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments through modifications or refinancing to more affordable levels.
“What you’ve seen now is rates are as low as they’ve been since 1971. Three-quarters of the American people get their mortgages through a Fannie Mae-Freddie Mac qualified loan and as a consequence of us being able to reduce the interest rates that are available, we have now seen some extraordinary jumps in the rate of home loan refinancing. We’ve already seen a substantial jump, 88 percent increase in refinancings over the last month. We’ve seen Fannie Mae refinance $77 billion of mortgages in March, which is their highest volume in one month since 2003. And rates on 30-year mortgages have dropped to an all-time low of 4.78 percent.” said Obama.
"the main message that we want to send today is, there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates.”
Obama plugged the http://www.MakingHomeAffordable.gov website several times throughout the discussion.
Greenlining Mortgages
brad | 21 March, 2009 16:49
What's Greenlining? Greenlining is a term I use to describe the often arbitrary way mortgage executives approve or don't approve certain mortgages depending on the origination channel. There are many forms of Greenlining but the one I'll discuss today is "joint venture" Greenlining.
Joint ventures between real estate brokerage firms and mortgage companies have become very popular in the last ten years. Most consumers and regulators are unaware of their true implications.
The biggest two lenders that have the most pay-to-play joint ventures are Wells Fargo and Countrywide (now Bank America). Here's a classic example of how a joint venture is structured...
HomeServices of America Inc is a Warren Buffet/Berkshire Hathaway company. Bershire Hathaway also owns a major stake in Wells Fargo Bank. Many of the twenty real estate brokerage offices owned by HomeServices are actively in joint ventures with Wells Fargo Bank to offer "in-house" mortgage financing.
The largest of the twenty real estate companies under the HomeServices umbrella is Edina Realty (big red). Edina Realty may be the single largest, most profitable real estate brokerage office in the country, yes the entire United States. Surprizingly, more so then even their sister company Prudential California. Hard to believe but factually accurate that a Midwest real estate brokerage firm is more profitable than a California brokerage, considering California's double or triple house prices and population.Back to the joint venture: The in-house mortgage company in our example is Edina Realty Mortgage.
Edina Realty Mortgage is a corporation that is partially owned by Edina Realty, HomeServices and Wells Fargo Bank. By creating this third party corporation, all three of the entities can share in the profit of Edina Realty Mortgage.
Why is this important?
Real estate brokerages are NOT allowed to get kick-backs from mortgage entities for business referrals. It's a huge RESPA violation. If the Edina Realty agents and office managers are pushing borrowers to use Edina Realty Mortgage then they must do so in such a manner that avoids RESPA (Fed) guideline conflicts.
The way these joint venture companies skirt regulatory guidelines is to create third party corporations such as Edina Realty Mortgage in which they own "stock" in and receive dividends from. Most consumers don't realize the underlying relationship and most regulators are too worthless or inept to see the inherent anti-trust issues.
Now that we know what a joint venture is, lets talk about what some of the by-products are.
Let us say a borrower buys a home from the Realty side and applies with the in-house mortgage company. The pressure to make the joint venture or Realty brokerage "happy" can drive the mortgage division to underwrite loans to much lower standards than normally acceptable.
Case in point: In 2007, prior to the subprime implosion, Edina Realty would originate a conforming loan application in one of their real estate branch offices by an Edina Realty Mortgage "prime loan officer". If the loan and borrower didn't qualify prime, the loan would be transfered to their "Alternative Finance" division in order to be farmed out to an outside lender. The outside lender would have no idea that the documents were actually reviewed and the borrower could not qualify for the home under normal circumstances.
So, the borrowers correct information would be inputted into the Wells Fargo approval system, then underwritten for an approval and if the loan didn't qualify the loan would be shifted over to an outside lender through the Alternative Finance division.
The loan was obviously a decline on the "A" side but would get "cleaned" up and brokered to outside lenders with most of the materially bad information taken out. These were loans that Wells Fargo/Edina Realty Mortgage knew couldn't qualify but would still rework and send to outside lenders to absorb. Voila, market turmoil and a state, region and country full of foreclosed homes. These are DIRECT lenders handing off junk loans with the full knowledge that the loan is toxic.
With the original application information uploaded to Freddie Mac or Fannie Mae and locked in the "A" side software system and the reworked application in the same software system just with a different loan number, it wouldn't be difficult for a decent regulator to put two and two together.
The trick is to find a decent regulator willing to take the time to put two and two together (not intended as a joke).