WaPo "Facts" About The Economy

Dean Baker fisks this WaPo "news" article:

The Washington Post appears to have outdone itself in a discussion of the politics surrounding the foreclosure crisis. For beginners, it told readers that:

[. . . T]he White House, which is looking past the midterm elections, has been restrained. Housing and Urban Development Secretary Shaun Donovan wrote over the weekend that 'a national, blanket moratorium on all foreclosure sales would do far more harm than good, hurting homeowners and home buyers alike.'"

Okay, it's fun with logic time. Secretary Donovan wants more foreclosures, presumably to further depress prices. [. . .] If Donovan thinks it is good to speed up the foreclosure process then why is the administration pushing HAMP? [. . .] That may make sense to the Washington Post, but probably not to anyone else. [. . .] The article then gives us a quote from a Democratic consultant without a name: "But shutting down foreclosures has the potential of shutting down the whole housing market, which isn't helpful to anybody."

Let's see, we have how many hundreds of thousands of homes that non-foreclosed sellers are putting on the market each month, plus a backlog of several hundred thousand foreclosed homes already in the banks' possession. How exactly does a moratorium on foreclosures shut down the whole housing market?

Of course it doesn't. But the cloud on titles to homes does. The Obama Administration wants to sweep reality under the rug. Baker does not mention one WaPo "fact" that astounded me:

Ninety percent of Americans are employed and more than 9o percent of homeowners pay their mortgages, Hart noted, but "the real issue is the space it takes in peoples' fear and uncertainty.

(Emphasis supplied.) In what world are 90% of Americans employed? Strictly speaking, the percentage of Americans employed is 58%. 64.7% of working age Americans are employed. And U6 is at 16%. Where does the 90% employed "fact" come from? From the narrower reading of unemployment that stands at around 10%. That measure excludes:

About 2.5 million persons were marginally attached to the labor force in September, up from 2.2 million a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Can we get some better "elites" please?

Speaking for me only

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    Agree wholeheartedly (5.00 / 1) (#2)
    by vicndabx on Tue Oct 19, 2010 at 09:49:32 AM EST
    I watching The Today Show yesterday AM and some guy was on talking about how Democrats don't do well in Republican districts - as though this somehow represents some fascinating new bit of information.  Such thought provoking in-depth analysis.....

    What's Obama's reward for helping (5.00 / 1) (#9)
    by Anne on Tue Oct 19, 2010 at 10:52:51 AM EST
    the banks keep the foreclosure machine going?  What's in this for him?  Because there has to be a reason why he's ignoring the big pile of crap in the middle of the room - the one where it's likely the mortgage-backed securities aren't backed by anything, rendering them worthless, where no one knows who holds title to the properties, and the banks and servicers have made fraud a company policy rather than a prohibition.

    I guess this will be another case of needing to look forward, to ignore the "mistakes" of the past, and oh-by-the-way, probably end up having to pour more billions into the banks and investment houses that built this house of cards.

    If you haven't seen this post at naked capitalism, read it and weep; or send it along to the geniuses at the WaPo.

    Bank of America alleged in a court filing this June:
    It appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies

    April Charney - a consumer lawyer with Jacksonville Area Legal Aid - and CNBC's Dennis Kneale noted in February 2009 that courts have found that some mortgages have been sold again and again to different trusts, when they should have only been sold once.

    Kneale explained that that is the reason that two different banks sometimes try to simultaneously foreclose on the same home (video follows).

    And today, Chris Whalen told CNBC's Larry Kudlow that Bear Stearns will be exposed as having sold the same loan to different investors on numerous occasions (see 6:45 into video).

    As I have repeatedly pointed out, the failure of the mortgage originators and banks to prepare and record proper documentation has led to an epidemic of fraud. The pledging of the same mortgage again and again to different trusts related to mortgage backed securities is just one result.

    And as long-time foreclosure investigator Nye Lavalle writes:

    On thousands of occasions I stated to regulators, CEOS, banks, Fannie and Freddie that the practices of the banks were that they were double and multi-pledging assets and pledging paid off and refinance notes to securitizations. This is something April, Max [Gardner] and I have discussed for years now. Now, they come and admit that each of my allegations were true. Without analyzing the deal, as complex as they are, you WILL NEVER KNOW IF THE FORECLOSING PARTY HAS "ANY" RIGHT TO FORECLOSE!!!

    It's too bad we aren't as stupid as the Washington elites think we are...

    So (5.00 / 1) (#10)
    by Zorba on Tue Oct 19, 2010 at 11:15:13 AM EST
    when will the lawsuits filed by the holders of these mortgage-backed securities commence?  As it becomes clearer and clearer that at least some of what they thought they were buying was not there, they're going to want their money back.

    That's already underway, at least (5.00 / 1) (#11)
    by Anne on Tue Oct 19, 2010 at 11:24:31 AM EST
    according to David Dayen at FDL:

    Investors have pooled their resources and are engaging in a major effort to force repurchases by the big-bank servicers.

    The current mortgage paperwork scandal adds more fuel to the fire as major servicers have halted foreclosures because of potential paperwork irregularities around the country. Concerns are also growing that banks may not have properly transferred loans into the mortgage pools in the first place. "This deficient approach undermines the integrity and the operational framework of the housing finance and mortgage system as it exists today," the Association of Mortgage Investors wrote in a press release [...]

    Investors from across the country have been coordinating legal strategies for over a year, with the effort ramping up in early spring, according to (Bill Frey, who runs the securities firm Greenwich Financial Services). Since then, more and more investors have formed a loose consortium, gaining momentum "like a snowball going downhill," he says. In the last month alone, the group added other investors that own an additional $100 billion in mortgage bonds.

    They have not filed any suits yet, Frey says, because the group is first trying to grow even more. Also, since each investor group has different, nonmortgage business with the banks, some investors have conflicting interests in how to proceed, he says. The consortium now represents investors that own more than $600 billion in mortgage securities, which is around a third of the entire mortgage securitization market. The group includes 65 major mortgage investors; Bloomberg reported that large investment companies including Black Rock, PIMCO and Fortress are part of the effort, as are the quasi-governmental Fannie Mae and the Federal Home Loan Banks, which both own private securitized loans.


    One attorney out of Texas is putting together a clearinghouse for investors to keep track of the different mortgage pools. They now claim the authority to act in over 2,300 cases. One more of these dropped yesterday:

    Today, the holders of over 25% of the Voting Rights in more than $47 billion of Countrywide-issued RMBS sent a Notice of Non-Performance (Notice) to Countrywide Home Loan Servicing, as Master Servicer ("Countrywide Servicing"), and to Bank of New York, as Trustee, identifying specific covenants in 115 Pooling and Servicing Agreements (PSAs) that the Holders allege Countrywide Servicing has failed to perform.

    The Holders' Notice alleges that each of these failures has materially affected the rights of the Certificateholders under the relevant PSAs. Under Section 7.01 of the PSAs, if any of the cited failures "continues unremedied for a period of 60 days after the date on which written notice of such failure has been given ... to the Master Servicer and the Trustee by the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates," that failure constitutes an Event of Default under the PSAs.

    So, the avalanche is coming, and I am hard-pressed to know how, exactly, keeping the foreclosure machine rolling is going to make any difference.


    I did think that (5.00 / 2) (#12)
    by Zorba on Tue Oct 19, 2010 at 11:37:16 AM EST
    the shareholder demands for repurchase (and, failing that, lawsuits) were inevitable.  What they bought was not what was represented to them.  Like you, I cannot see how continuing with foreclosures will make any difference in the upcoming lawsuits/restitutions/etc.

    Many purchasers are (none / 0) (#18)
    by BackFromOhio on Tue Oct 19, 2010 at 01:22:39 PM EST
    large institutions that might be hard pressed to establish reasonable reliance on the seller representations.  Will be interesting

    I think some of the avalanche is expected (none / 0) (#15)
    by Militarytracy on Tue Oct 19, 2010 at 12:23:07 PM EST
    today.  I know they've been riding the cable networks hard about stating things that affect the markets.  The news should not affect the markets ya know, that isn't journalism then.  I woke up this morning and flipped CNN on on my way to the kitchen to make the coffee.  They immediately start out talking about where the markets finished on Friday.  All morning now they keep shifting to where the market is at this time.  It is 118 pts off right now, and Velshi says that the market has been having a rough morning.  Well I remember much rougher mornings than this and you guys didn't start out microfocused on the market and you didn't check back hourly either unless it started flushing like mad.  They are circling any news on the stock market though like a bunch of vultures.  They are all waiting for certain truths to be expressed by the stock market without saying, "We are waiting for certain truths to be expressed by the stock market".

    China raised interest rates a lot today (5.00 / 1) (#24)
    by Cream City on Tue Oct 19, 2010 at 05:05:59 PM EST
    is the reason I saw reported for the stock market's drop.  China did so as a hedge against inflation, for one, so it is worrisome that China foresees inflation to make this economy even worse for so many of us with pay cuts, but imagine how bad it will be for those on (fixed) unemployment. . . .

    And unspoken, but in line with what you say, was any link of China's action to the mortgage mess -- but it could make sense that it also may greatly destabilize our fragile economy and lead to inflation.

    Just got home to get to the news, and CNN is reporting that we only have seen the tip of the iceberg of the mortgage mess that could take us down like the Titanic.


    Any player who isn't a born loser (5.00 / 0) (#14)
    by Militarytracy on Tue Oct 19, 2010 at 12:10:28 PM EST
    was in their lawyer's office yesterday morning at the latest.

    This is what they are covering up (none / 0) (#13)
    by Militarytracy on Tue Oct 19, 2010 at 12:09:07 PM EST
    I susected as much.  It terrifies them and it is fraud and it is illegal as hell.  In the few instances where it was revealed that a mortgage supposedly belonged to more than one securitized entity there were some weak excuses about a refi not being taken out of the original trust.

    They have to face this and deal with this.  You can't run away from this.  But this is why notes cannot be unwound, because the whole world will find out that anyone who had any investment of any kind in MBS was raped.


    Do you think (none / 0) (#16)
    by Zorba on Tue Oct 19, 2010 at 12:35:09 PM EST
    that it will only involve civil lawsuits and massive restitution to shareholders, or will the feds get involved and prosecute?  I wish the feds would, but I'm pessimistic about it, given the government's apparent mantra of "Too big to fail, too big to jail."  Maybe I'm wrong, though, and if enough stink is made, they'll be forced to investigate and prosecute.  I realize that prosecutions will hugely roil the financial markets, but these guys have been getting a pass for far too long- the government has been teaching them that they can get away with almost anything, no consequences, and it's a lesson they've learned very well, unfortunately for the rest of us.

    I haven't a clue (none / 0) (#17)
    by Militarytracy on Tue Oct 19, 2010 at 12:52:13 PM EST
    in the first link that Anne provides something very disturbing is in there too.  Bank of America took over Taylor, Bean, Whitaker mortgage and they need to see the Taylor, Bean, Whitaker files that Fannie has now to clarify who owns what but Fannie won't let them see $hit.  Looks like they are having to sue Fannie now.  Why won't Fannie comply to clear the air and under who's order?

    Prosecute themselves? (none / 0) (#19)
    by coast on Tue Oct 19, 2010 at 01:22:55 PM EST
    Banks themselves only hold a small part of the MBS market.  And what they do own is generally guaranteed by Ginnie.  The majority of the MBS market is held by Fannie and Freddie.  In the end, again the banks won't pay.  We will.

    Either Fannie and Freddie want (5.00 / 0) (#20)
    by Militarytracy on Tue Oct 19, 2010 at 01:52:46 PM EST
    to know who owns what....or at this point they are complicit in the cover up.  That is how I see it.

    I fear it is the latter (none / 0) (#25)
    by Cream City on Tue Oct 19, 2010 at 05:07:24 PM EST
    as Fannie and Freddie have just been so screwed up.

    Unfortunately, that sounds like (none / 0) (#21)
    by Zorba on Tue Oct 19, 2010 at 01:53:07 PM EST
    "Same old, same old."  

    Gawd protect us from the (none / 0) (#1)
    by MO Blue on Tue Oct 19, 2010 at 09:34:47 AM EST
    "very serious people" and the media that perpetuates them.

    Absolutely... (none / 0) (#3)
    by kdog on Tue Oct 19, 2010 at 09:51:01 AM EST
    there is no shortage of homes for sale...this is all about covering up title and foreclosure shenanigans.

    Henry Ford did say if we really knew how banks operated we'd freakin' riot...the housing crash let some dirty little secrets out the bag.  

    But I wouldn't sweat that riot if I was a bankster...we're half the men and women the French are.

    Really. (none / 0) (#4)
    by Ga6thDem on Tue Oct 19, 2010 at 10:07:00 AM EST
    I keep waiting for people to bring out their pitchforks and take down the bankers but all we have is the tea party who stands for heaven knows what.

    I think they stand for... (none / 0) (#5)
    by kdog on Tue Oct 19, 2010 at 10:12:40 AM EST
    the opportunity to become a grifter themselves one day:)

    OT BTD...we need a NY Gubernatorial Debate thread brother...Jimmy McMillan!  I can't even get his website to load, the dude is blowing up.  


    Not that I would have watched it (5.00 / 1) (#6)
    by Big Tent Democrat on Tue Oct 19, 2010 at 10:39:24 AM EST
    anyway, but scheduling the debate the night of a Yankee game? Who was the genius who thought that one up?

    Mets fan? (none / 0) (#8)
    by kdog on Tue Oct 19, 2010 at 10:46:53 AM EST
    Come to think of it, Jimmy was more entertaining than the Mets this season!

    Hard to argue that it wasn't a farce...but you know me, one good farce deserves another.  The debate actually changed my mind...I'm off Madame Davis and now torn between Jimmy and the Green Party working man Howie Hawkins.


    Kdog, years ago, (none / 0) (#23)
    by NYShooter on Tue Oct 19, 2010 at 04:52:58 PM EST
    an elderly friend of mine was getting ready to retire. So he, and his lovely wife went to Arizona to check out the scene, and look for their retirement home. He was pretty rich, not stinking, filthy rich, but rich enough. He sold his steel fabricating business (that was when America was still manufacturing things) and said, "see ya later."

    Anyway, a couple of years later I ran into him at the boat show in the Coliseum, and so, we naturally got a few drinks and started yapping  away. I mentioned to "Jerry," there's something different about you, and your gorgeous wife too. You seem so serene, so peaceful, what's going on?" He looked around, pulled me closer to him, and whispered in my ear, "Shooter, I found the Holy Grail."  "What? You're as religious as Charlie Manson, what are you talking about, Cuz?"  Again he talked in riddles and said, "I've found a perpetual money machine."  I said, "money was never your problem, you're loaded." "Nah, he replied, I was a piker, I got money now, pouring down like Niagara Falls, buckets and buckets of non-stop money and you know what the best part is?" My eyes bugged, "what?" It's the easiest money I ever made. Shooter, I never knew sh!t like this existed; I'm not kidding, I still can't get over it."

    Bottom line, he had bought a small bank in Arizona, and the rest is, as they say, history.

    Kdog, the guy had worked hard all his life, and earned himself a real good retirement. But I'll never forget the incredulous transformation he experienced way late in his life. He called his bank "Aladdin's Lantern."


    I find I'm with... (none / 0) (#26)
    by kdog on Wed Oct 20, 2010 at 09:21:50 AM EST
    my man Henry David Thoreau and other enlightened cats from his era, "acquiring money by usury is unnatural".  

    Maybe we can't change the way we roll, but they can't make you play...that's why I'm a 1%er without a bank account or a line of credit...the whole scheme makes me wanna puke.  It ain't me babe:)


    Like everything else (none / 0) (#27)
    by NYShooter on Wed Oct 20, 2010 at 03:49:05 PM EST
    It's a question of degrees. Back to my examples: If you needed a hundred bucks and couldn't get it anywhere else, I don't see anything wrong with giving you the money plus, let's say 2% interest to compensate for the money I'd lose from my savings account. Charging you 20%, and taking advantage of your emergency is what's wrong, and immoral.

    But, my point was that everything we felt was wrong about the Banking racket was confirmed by my little story about my friend in Arizona.



    Reasonable position Shooter... (none / 0) (#28)
    by kdog on Wed Oct 20, 2010 at 05:18:24 PM EST
    Nothing wrong with reasonable interest on a loan, though when I make a loan, helping my fellow man is all the interest I want or need:)

    Your buddy in AZ reminds me of one of my favorite verses from Ryan Bingham...

    "I've never understood why all my money
    goes to man down at the bank.
    When all he does is sit and think
    about the money I'm gonna make."

    Now scrach your head, kdog (none / 0) (#29)
    by NYShooter on Wed Oct 20, 2010 at 06:56:43 PM EST
    you just got a NY Nuggie...

    Like I'd really charge you interest!!!


    I never thought... (none / 0) (#30)
    by kdog on Wed Oct 20, 2010 at 07:45:31 PM EST
    such a thing for a second, I'm saying in general:)

    Nuggie for you for jumping to that conclusion!


    I deleted a comment (none / 0) (#7)
    by Big Tent Democrat on Tue Oct 19, 2010 at 10:44:41 AM EST
    that seemed misplaced.

    90% of the time when I use 90% (none / 0) (#22)
    by Militarytracy on Tue Oct 19, 2010 at 02:00:03 PM EST
    I have no facts, I'm just making a figure up cuz I know in my soul of souls for the most part I am right and you are wrong.  I think it makes me sound studious and credible.  It does not fool teenagers though and they will immediately point out that I'm making stuff up and demand to see the books.  But I kept no books on how many times they were late.