Tuesday, March 08, 2011

Financial Crisis Inquiry Commission Report

Bob Hurt - Scorn for Govt Fraud
An Ectograph of Biz-Gov Fraud, Greed, Racketeering

The United States Government finally figured out what caused the present financial crisis that skyrocketed unemployment to 15% or more, and jammed realty prices down close to their real values, 30% to 60% of their phony 2008 levels.  The government issued its Financial Crisis Inquiry Commission report and posted it on the web.This report explains the financial crisis in gory detail.  

In a nutshell:

EXECUTIVE SUMMARY - Conspiratorial collaboration between government and the banking, mortgage, and insurance industries resulted in unprecedented sale of realty to unqualified buyers, and unauthorized use of notes in commerce known as securitization, coupled with fraudulent derivative sales and widespread appraisal fraud pillaged investors.  Crooked rocket docket courts compounded the problem in judicial foreclosure states by letting crooked lenders, trusts, and servicers steal realty and throw owners into homelessness.

Now you have the bottom line.  But don't take my word for it. Download and read the report here:

Get and Use the FCIC Report in Court


The above site constitutes SELF AUTHENTICATING EVIDENCE, so you can cite probativeexcerpts of it in your foreclosure fraud, appraisal fraud, or mortgage fraud court case.

You can get a screen capture program here for your browser:


You can use it to capture pages of the report for use in pleadings.

The report summarizes the crisis as follows:

Salient Paragraphs of FCIC Report Summary

------------ FCIC summary of crisis, starting page xvi ---------------

In this report, we detail the events of the crisis. But a simple summary, as we see it, is useful at the outset. While the vulnerabilities that created the potential for crisis were years in the making, it was the collapse of the housing bubble—fueled by low interest rates, easy and available credit, scant regulation, and toxic mortgages— that was the spark that ignited a string of events, which led to a full-blown crisis in the fall of 2008. Trillions of dollars in risky mortgages had become embedded throughout the financial system, as mortgage-related securities were packaged, repackaged, and sold to investors around the world. When the bubble burst, hundreds of billions of dollars in losses in mortgages and mortgage-related securities shook markets as well as financial institutions that had significant exposures to those mortgages and had borrowed heavily against them. This happened not just in the United States but around the world. The losses were magnified by derivatives such as synthetic securities.

The crisis reached seismic proportions in September 2008 with the failure of Lehman Brothers and the impending collapse of the insurance giant American International Group (AIG). Panic fanned by a lack of transparency of the balance sheets of major financial institutions, coupled with a tangle of interconnections among institutions perceived to be “too big to fail,” caused the credit markets to seize up. Trading ground to a halt. The stock market plummeted. The economy plunged into a deep recession.

The financial system we examined bears little resemblance to that of our parents’ generation. The changes in the past three decades alone have been remarkable. The  financial markets have become increasingly globalized. Technology has transformed the efficiency, speed, and complexity of financial instruments and transactions. There is broader access to and lower costs of financing than ever before. And the financial sector itself has become a much more dominant force in our economy.

From 1978 to 2007, the amount of debt held by the financial sector soared from $3 trillion to $36 trillion, more than doubling as a share of gross domestic product. The very nature of many Wall Street firms changed—from relatively staid private partnerships to publicly traded corporations taking greater and more diverse kinds of risks. By 2005, the 10 largest U.S. commercial banks held 55% of the industry’s assets, more than double the level held in 1990. On the eve of the crisis in 2006, financial sector profits constituted 27% of all corporate profits in the United States, up from 15% in 1980. Understanding this transformation has been critical to the Commission’s analysis.

Now to our major findings and conclusions, which are based on the facts contained
in this report: they are offered with the hope that lessons may be learned to
help avoid future catastrophe.

-------------------------- End of Summary from FCIC ------------

Much more text accompanies these conclusions in the report.  READ it

Summary of FCIC Report Conclusions

----------------------- Summary of FCIC Conclusions ------------------

  • We conclude this financial crisis was avoidable.
  • We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets.
  • We conclude dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.
  • We conclude a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.
  • We conclude the government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets.
  • We conclude there was a systemic breakdown in accountability and ethics.
  • We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.
  • We conclude over-the-counter derivatives contributed significantly to this crisis.
  • We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.
--------------------End of summary of FCIC Conclusions

Bob Hurt's Opinion of the Mess

In my opinion, Presidents George W Bush and Bill Clinton bear serious responsibility for the crisis because of their idiotic ideas of making sure every adult in America who wanted a house could buy a house.  Next in line, the lender banks intentionally sold mortgage loans to unqualified borrowers.  Then, the Federal Reserve and member banks further encouraged the insanity by refusing to control lenders.  Then lenders involved themselves in wrongful securitizations and derivative sales that AIG and others insurers, including the FDIC underwrote.  These and fraudulent appraisals caused the collapse of real estate prices.

However, the report gives scant if any attention to the reality of 30 years of rampant appraisal fraud in which Realtors, mortgage brokers, lenders, appraisers, and some homeowners FLAT OUT LIED about realty values.  Typically, appraisers ignored replacement cost and income capitalization valuation methods, and focused on market value to determine the worth of realty.  And the Federal Reserve repeatedly jockeyed interest rates so that with every reduction, people rushed to buy a bigger house because they could now afford it.  Speculation drove prices higher to the delight of middle class investors.  As a result, inflated prices when the crisis hit stood as much as 3 times higher than the actual value of the realty, particularly in New York and California where the prices got totally insane.

The report did not reveal anything most studious people did not already know.  But it did provide the concrete GOVERNMENT PROOF of the collusion and racketeering at various levels that collapsed realty values and threw people out of work and out of their homes. Serve MANDATORY JUDICIAL NOTICE to courts of this report. Preach its implications of racketeering to all who will listen, particularly legislators and judges.. The time has come to DEMAND that the courts provide meaningful relief and remedy, not for the crooked lenders, but for their hapless victims.

Demanding Relief for Victims and Penalty for Perps

Courts should cram down every possible mortgage loan to the present real estate value minus all paid-in equity, reschedule it for 30 years with no baloon and 1% over inflation rate.  They should require written contracts signed by both the lender and the borrower, and invalidate the unilateral adhesion agreements without such bilateral contracts.  Courts must stop foreclosures dead in their tracks.  Everyone up the investment chain above the end consumer must suffer the burden of equity loss.

Every legislator, executive, and judge who supported the factors that caused the crisis should permanently leave government without pension.  Legislators must mandate a screaming end to sovereign immunity, particularly judicial immunity. Only heads on a pike will prevent such insanity in the future.

Further, Bob sayeth naught...

till later.

Bob Hurt
2460 Persian Drive #70
Clearwater, FL 33763
727 669 5511
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