Given recent conversations, I thought some might be interested in the
following. If any of these predictions prove accurate, there are
likely to be global consequences.
Barry
Begin forwarded message:
From: "Mary Bottari, BanksterUSA" <[email protected]>
Date: January 4, 2011 9:58:32 AM EST
January 4, 2011
CONTACT: Mary Bottari at (608) 260-9713 or [email protected]
BANKSTER UPDATE: FULL CATASTROPHE BANKING IN 2011
With a $4.7 trillion dollar bailout under their belts with no harm
done to their billion-dollar bonuses, don't expect Wall Street
bankers to be chastened by the 2008 financial crisis. Below we list
eight things to watch out for in 2011 that threaten to rock the
financial system and undermine any recovery.
1) The Demise of Bank of America
Wikileaks founder Julian Assange is promising to unleash a cache of
secret documents from the troubled Bank of America (BofA). BofA is
already under the gun, defending itself from multiple lawsuits
demanding that the bank buy back billions worth of toxic mortgages
it peddled to investors. The firm is also at the heart of robo-
signing scandal, having wrongfully kicked many American families to
the curb. If Assange has emails showing that Countrywide or BofA
knew they were recklessly abandoning underwriting standards and/or
peddling toxic dreck to investors, the damage to the firm could be
irreparable.
2) Robo-signers Wreaking Havoc
With lawsuits abounding, new types of fraud in the foreclosure
process are being uncovered daily, including accounting fraud, fake
attorneys, destroyed promissory notes and false notarizations. The
crisis not only calls into question the legality of untold
foreclosures, it also calls into question the value of trillions of
dollars worth of mortgage-backed securities held by banks, pension
funds, federal, state and local governments. The only government
report on the topic by the feisty Congressional Oversight Panel for
the TARP acknowledges that “it is possible that ‘robo-signing’ may
have concealed deeper problems in the mortgage market that could
potentially threaten financial stability.”
3) MERS Madness
In addition to outright fraud, numerous state Supreme Courts have
questioned the legal standing of the Mortgage Electronic
Registration or "MERS" system. MERS is listed as the mortgagee for
60% of U.S. mortgages. It is an electronic clearinghouse created by
industry to bypass the property registration system developed by our
forefathers in precolonial days to ensure that the King could not
easily rob the subjects of their land. Wall Street turned to MERS to
speed securitizations (and now foreclosures), but its legal standing
is now in doubt and its shoddy processing of documents has major
ramifications for the securitization process as well. Look for a
rotten "MERS fix" in the new Congress. Let's hope it gives consumer
advocates some leverage to demand justice for Americans being robbed
by the new Kings on Wall Street.
4) Flash Crash Calamity
The "flash crash" of May 2010 rattled the markets and caused a
stunning 700 point drop in the Dow within minutes. Regulators think
they know what occurred, but they are moving too slowly to put the
brakes on hair-trigger trading. Seventy percent of Wall Street
trades take place in milliseconds, so it is no surprise that mini-
flash crashes are becoming a constant. With traders now gearing up
to trade on raw news feeds and Twitter, we can anticipate even more
volatility. A small financial transaction tax targeting high-volume,
high-speed trades is long overdue. It would throw sand in the
roulette wheel and raise much needed revenue for the federal
government.
5) Bigger Behemoth Banks
The Federal Reserve is planning to "stress test" the big banks
again. The same 19 banks that underwent the first stress tests in
2009 will be tested again, but this time the Fed says it won't
release the results. Why not? Banks with toxic mortgages and
mortgage-backed securities on their books and concomitant legal
exposure to "put back" law suits are being kept afloat by accounting
tricks, TARP and Fed loans. Honest stress tests of still weak
financial institutions may well result in sales and buyouts that
will further consolidate the already concentrated banking industry
and create larger and more unwieldy "too big to fail" behemoths --
backed by the guarantee of the American taxpayer.
6) Foreclosure Tsunami
Housing foreclosures may top nine million in 2011 and Goldman Sachs
predicts the number will reach 12 million in the next few years. The
result will be another significant drop in home prices in 2011 and
even more families underwater. Civilized nations see the forcible
migration of a city the size of New York as an economic and
humanitarian catastrophe, but not the United States. The Obama
administration and Congress have callously refused to take
meaningful action to aid families facing foreclosure even in the
face of widespread predatory lending and rampant foreclosure fraud.
The only hope now for millions of American families is aggressive
action by the 50 state Attorneys General who are actively
investigating foreclosure fraud. Whether they have the guts to
wrestle a settlement out of the big banks that slows the foreclosure
machine and offers families meaningful options has yet to be seen.
7) Bankrupt Cities and States
Meredith Whitney, a research analyst who correctly predicted the
credit crunch, is now warning that over 100 American cities could go
bust next year. She anticipates billions worth of municipal bond
defaults and warns: "next to housing this is the single most
important issue in the U.S. and certainly the biggest threat to the
U.S. economy." States are also in dire straits. The economic shock
of mass unemployment on top of years of population decline,
deindustrialization and the like have left cities unable to meet
their obligations to taxpayers and retirees. With austerity nuts in
charge of the House, it may take a bankruptcy of a major player to
prod an appropriate federal response to this looming disaster.
8) Gas Prices above $4.00
The price of energy and other commodities shifted into high gear in
late August when the Federal Reserve Chairman decided to stimulate
the economy with quantitative easing. Speculators quickly began
bidding up the value of asset classes like crude oil, metals and
food commodities. In December, the Commodities Futures Trading
Commission failed to apply position limits to these commodities,
delaying rules that would crack down on speculators and aid
consumers who are already seeing big price hikes at the pump.
Without swift action, skyrocketing gas prices will further tank an
already stalled economy.
As we hope for the best in 2011, let's prepare for the worst. The
big banks are sure to deliver.
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