IN THE CIRCUIT COURT OF THE __________________ JUDICIAL CIRCUIT,
__________________ COUNTY, ILLINOIS
JP MORGAN CHASE BANK, NATIONAL ASSOCIATION Plaintiffs, v.
Pro-Se Defendants COUNTERCLAIM
Pro Se Counter-Plaintiffs v. JP MORGAN CHASE BANK, NA CHASE HOME
FINANCE LLC WASHINGTON MUTUAL BANK NA Counter-Defendants
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No.
DEMAND FOR JURY TRIAL
OWNERS SUPPLEMENTAL EVIDENCECOMES NOW Defendants and
Counter-claimants __________________, (collectively Owners),
proceeding pro se hereby files Supplemental Evidence presenting to
the Court pertinent information that has been discovered as a
result of further investigation:
THE CONSPIRACY1. The matters raised by the Owners in their
affirmative defenses and counterclaims
cannot be viewed in a vacuum and need to be viewed in the
context of what Chase and other related Bank entities were doing,
and are continuing to do, to this day. 2. Defendant and
Counter-Plaintiff, __________________has conducted extensive
research into the anomalous events transpiring in our country
and the world today, and has sought
to identify the underlying root cause in such a way that these
events make sense. Her journey began in ignorance and naivet, grew
to incredulity, and ended with Truth. She seeks to expose this
Truth so that our great nation can begin to heal. For unless the
problem can be identified, we will be unable to find a solution.
One thing is certain: a cancer is infecting our Nation and must be
excised now. This cancer has been present for decades as evidenced
in attorney Ellen Browns Web of Debt The 1890s were plagued by an
economic depression that was nearly as severe as the Great
Depression of the 1930s. The farmers lived like serfs to the
bankers, having mortgaged their farms, their equipment, and
sometimes even the seeds they needed for planting. They were
charged so much by a railroad cartel for shipping their products to
market that they could have more costs and debts than profits. The
farmers were as ignorant as the Scarecrow of banking policies;
while in the cities, unemployed factory workers were as frozen as
the Tin Woodman from the lack of a free-flowing supply of money to
oil the wheels of industry. In the early 1890s, unemployment had
reached 20 percent. The crime rate soared, families were torn
apart, racial tensions boiled. The nation was in chaos. Radical
party politics thrived. 3. Like any investigator, one need simply
follow the money and ask who benefited
from this crisis, who made off with Trillions and who is NOT
being prosecuted, for then one will be led directly to the
culprits. Those culprits are Insiders at the privately-owned
Federal Reserve, Wall Street, JP Morgan Chase, Citigroup, Bank of
America, HSBC, and Goldman Sachs (the Conspirators) which are
currently engaged in a systematic multi-faceted course of conduct,
a Conspiracy, in every state in these United States of America, and
the world to bring about an economic collapse of the monetary
system utilized by most of the countries in this world - a
fiatbased monetary system which is a veritable ticking time bomb
due to explode soon. Upon the inevitable collapse of this system,
it is speculated that the Conspirators will unveil a Global
monetary system which will allow them to perpetuate their scam of
printing fake money and charging interest on that fake money
thereby having the power and control over the world - a position
they have covertly held for centuries. 4. Indisputable evidence has
emerged from investigations by the SEC, FBI, FTC,
FDIC and various other governmental agencies which expose the
Conspirators scheme resulting in the greatest shift of assets from
the middle class to the wealthiest around the world. Although
these allegations may sound incredulous, the facts and events
unfolding in our world fully corroborate them. 5. The Conspirators,
supposedly among the best and brightest on Wall Street, the
Federal Reserve and the five largest banks, are paid Millions of
dollars for their superior intellect, but said Conspirators allege
that not one of them had an inkling that an economic crisis was
brewing, in direct contradiction to what others on Wall Street were
saying. 6. According to Nomi Prins, former Goldman Sachs analyst
who authored It Takes
a Pillage, Rolling Stone Wall Street reporter Matt Taibbi, who
authored Griftopia, and Michael Lewis who authored The Big Short,
those on Wall Street who were not insiders absolutely knew that
something was happening which prompted some to look deeper into the
sale of Mortgage-Backed securities. They soon discovered that even
though these securities were rated AAA, meaning they were low risk
investments, they were, as revealed in Congressional hearings,
pieces of crap. Any rational person would ask why these highly
respected firms would sell AAA-rated pieces of crap? Herein lies a
paradox. 7. In fact, many Wall Street outsiders felt that a house
of cards was intentionally
being set up, which was validated in a CNBC documentary entitled
House of Cards which cited the following quotation from an internal
Wall Street email dated 12/15/2006: Lets hope were all wealthy and
retired by the time this house of cards falters. 8. xx- stated: In
the years leading up to the crisis many financial institutions
borrowed to the hilt, leaving them vulnerable to financial distress
or ruin if the value of their investments declined even modestly.
For example, as of 2007 the five major investment banksBear
Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan
Stanleywere operating with extraordinarily thin capital. By one
measure, their leverage ratios were as high as 40 to 1, meaning for
every $40 in assets, there was only $1 in capital to cover losses.
Less than a 3% drop in asset values could wipe out a firm. To make
matters worse, much of their borrowing was short-term, in the
overnight marketmeaning the borrowing had to be renewed each and
every day. For example, at the end of 2007, Bear Stearns had $11.8
billion in equity and $383.6 billion in liabilities and was
borrowing as much as $70 billion in the overnight market. It was
the equivalent of a small business In the January 2011 Financial
Crisis Inquiry Commission (FCIC) Report - Pg
with $50,000 in equity borrowing $1.6 million, with $296,750 of
that due each and every day. One cant really ask What were they
thinking? when it seems that too many of them were thinking alike.
And the leverage was often hiddenin derivatives positions, in
off-balance-sheet entities, and through window dressing of
financial reports available to the investing public. The kings of
leverage were Fannie Mae and Freddie Mac, the two behemoth
government-sponsored enterprises (GSEs). For example, by the end of
2007, Fannies and Freddies combined leverage ratio, including loans
they owned and guaranteed, stood at 75 to 1. 9. On 3-15-2012
Economist Charles Kadlec, writer for The Daily Reckoning and
member of the Economic Advisory Board of the American Principles
Project reported the following in an article entitled Tim Geithner
Covers for Corruption on Pennsylvania Avenue: The government
through Fannie Mae and Freddie Mac directed $5.2 trillion (that is
trillion with a T) of capital to increase the supply of mortgages.
In addition, it passed a law that required banks to make billions
of dollars in loans to individuals that were unlikely to pay off
the loans, in the end with 0% down. In 1998, Fannie Mae announced
it would purchase mortgages with only 3% down. And, in 2001, it
offered a program that required no down payment at all. Between
2001 and 2004, subprime mortgages grew from $160 billion to $540
billion. And between 2005 and 2007, Fannie Maes acquisition of
mortgages with less than 10% down almost tripled. These loans are
now known as subprime and alt A loans. At the time they were made,
Fannie Mae and Freddie Mac encouraged their issuance by lowering
their standards and buying them up from the now vilified mortgage
brokers, S&Ls, banks and Wall Street investment banks. This
activity was not due to a lack of regulation or oversight as you
(Treasury Secretary Geithner) claim. Both companies are under the
direct supervision of a federal regulator and Congress. At the time
these loans were being purchased by these two Government Sponsored
Enterprises, their actions were defended by many in Congress who,
led by Senator Chris Dodd and Congressman Barney Frank, saw such
reckless lending as a successful government initiative. At the same
time, the easy money policies of the Federal Open Market Committee,
of which you were a voting member, were feeding an asset bubble in
residential real estate, providing what proved to be an
irresistible lure not only for speculators, but also for American
families trying desperately to buy a house before inflation robbed
them of their chance for home ownership. Six top executives of
Fannie Mae and Freddie Mac have been charged by the Securities and
Exchange Commission with securities fraud for hiding the size of
the purchases of low quality mortgages from the market. In
addition, the normal check on excessive leverage provided by
unwilling lenders was overwhelmed by the perception, now validated,
that Fannie
Mae and Freddie Mac debt were backed by the full faith and
credit of the federal government. This created a willing buyer
backed by the federal government with unlimited access to credit
markets and a trillion dollar budget. No wonder S&Ls and Wall
Street found ways to satisfy the demand. Blaming a lack of
regulation for the subsequent losses is political spin meant to
cover up the greed and corruption on Pennsylvania Avenue that led
to the crisis. these two state sponsored financial giants have cost
taxpayers more than $140 billion and are seeking billions more in
bailout funds. 10. Any rational person would ask, as the FCIC
Report pondered, What were
they thinking. And more important: What are they up to? These
highly questionable anomalies would prompt any rational person to
ask the following questions: A. Why would the banks create
questionable loan products and lure prospective borrowers into
these loans, knowing that if interest rates were to rise, these
clients would be unable to make their payments; B. Why would banks
sell mortgage-backed securities to investors and then not follow
the governing documents and deliver the notes to the investors; C.
Why would the originators of the loans purport to be the lender,
when the loans were pre-funded by the investors of the MBSs; D. Why
would the Depositors fail to record the documents as required by
law to at the county level, thus slandering owners titles across
America; E. Why would mortgage servicers promise to modify
borrowers loans and then repeatedly lose the paperwork which was
sent in multiple times; F. Why would the Originating Lenders stop
using standard underwriting to approve loans; G. Why would
originators accept and encourage inflated appraisals; H. Why would
the banks fraudulently fabricate documents and then have
robo-signors forge them; I. Why would the originators not deliver
the notes to the trusts thus rendering the MBS non-mortgage-backed;
J. Why would the banks pretend that this economic crisis was a
random event that they knew nothing about; K. Why would the Federal
Reserve lower interest rates and keep them low knowing that they
would be creating a bubble;
L. Why are the courts pushing foreclosures through as fast as
they can, thereby tearing families apart while 20 million housing
units in America are vacant and rotting and the banks cannot keep
up with this burgeoning inventory of REO properties. Statistics
prove that foreclosure breeds foreclosure and creates a vicious
cycle: more homelessness, despair, and crime in addition, causes
real estate prices plunge further and further thereby affecting all
Americans; M. Why are 90% of all mortgage Originators now bankrupt;
N. Why are banks which were considered too big to fail, growing
even larger as they acquire the banks which failed for literally
pennies on the dollar; O. Why are the banks CEOs and executives
paying themselves Millions and Millions for companies they ran into
the ground; P. Why did corporations move manufacturing out of this
country; Q. Why has our free-market economy, which entails risk,
eliminated risk through the purchase of credit default swap
insurance; R. Why are numerous cases against the largest banks
being prosecuted and settled but no one is being sent to jail...
11. The Conspirators reaped, and are continuing to reap, untold
Trillions of dollars
while others writhe in misery, anxiety, anguish, and panic. This
unconscionable lust for power and lack of social conscience
displayed by the Conspirators has resulted, and is continuing to
result, in millions of citizens being thrown out of their homes
oftentimes with nowhere to go, an increase in suicide, massive
unemployment, a lowered standard of living, and trillions of
dollars of wealth stripped from the American public and put into
the Conspirators already burgeoning pockets. 12. This atrocious,
flagrant and abominable scheme is ongoing and its final
objective
is yet to be realized, but is indeed looming. However, judges
across the country have also asked themselves the aforementioned
questions and are finally beginning to see the truth and are ruling
against the Conspirators. 13. The hope for our country is being
placed in the hands of our judiciary which was
established by our founding fathers to mete justice equally; to
see through the antics that the Conspirators counsel will
undoubtedly try to utilize to divert the judiciarys attention from
the substantive allegations posed in this complaint, to the trivial
and technical, in their attempt to
circumvent the laws of this nation. It is the hope of the Owners
that the judiciary will have the courage to uphold their sacred
oaths and deliver a powerful message that will serve to deter the
Conspirators from future violations of the law. For anything less
than that can only aid in the disintegration of our civilized
society. 14. This Conspiracy is being waged across the globe and is
multi-pronged, however
for the purposes of the instant case, and other victims across
America who are similarly situated, this supplemental evidence will
focus on the role that foreclosure is playing in the Conspiracy.
THE FIAT-BASED MONETARY SYSTEM 15. At the core of the Conspiracy is
the collapse of the fiat monetary system used by
America and manipulated by the Conspirators. Fiat money is not
asset-backed by gold or silver but instead backed by faith and debt
where money is printed out of thin air. 16. This faith-based system
requires that those at the helm of our largest institutions
operate from a foundation of trust, ethics, honesty, integrity,
compassion, morals and social conscience. 17. The Conspirators have
an expertise in the world of finance and economics and
control the world of finance. They have used this expertise and
control to exploit the foundation of trust that Americans and
others around the world relied upon, and manipulated the system to
their advantage. 18. History shows that any fiat debt-based
monetary system is unsustainable and
every society which based its currency upon this system has
collapsed. Its doom is based upon expanding debt and the
compounding interest needed to sustain that debt, thereby driving
the engine of the economy. At some point in time, the debt reaches
a point where it becomes so great that the compounding interest
exceeds the revenue coming into the Treasury, at which point, the
system collapses. The money meltdown observed in Wall Street is
what monetarists have been warning about for some time. What we are
witnessing now is the failure of the central banking system. The
debt-based fiat monetary system with compounding interest is simply
unsustainable and the United States, occupying the pinnacle of
the
capitalistic model, is being brought down by the inherent
fallacies within its own monetary system. A. KameelWall Street
Meltdown Failure of Central Banking System by 10/20/08 the Edge
19.
The Federal Reserve uses the magic of Compounding Interest to
fleece the
American people. Debora O'Malley, M.Sc. and Melvin Pasternak,
Ph.D. explained how easy it to do so in their March 15, 2012
article entitled The Money Making Magic of Compound Interest: When
Albert Einstein was asked: What is the most fantastic thing you
ever realized in all your studies? He sarcastically responded,
Compound interest. ...the principles of compound interest can be
used to make a substantial amount of money over time. Financially
speaking, compounding is the exponential increase of an investment,
or the interest you earn on interest. If you put $2,000 in the bank
with a 5% annual interest, you will earn about $100 in interest the
first year. If you leave that $100 in your account, the following
year, your $2,100 will earn $105 in interest. Compound interest is
most powerful over a long period of time. Using the above example,
your $2,000 initial investment would double in about 14 years. If
all the money remained untouched, it would earn twice as much
interest between years 15 through 28. In year 29, you'd effectively
be earning 20% interest on the original investment (sometimes
called "yield on cost"), all without needing to lift a finger. 20.
According to Modern Money Mechanics, a booklet produced by the
Federal Reserve Bank of Chicago: Fiat currencies are backed by
debt. (loans). As the debt grows, governments interest burden grows
with it. The more our tax dollars are consumed by interest, the
fewer dollars are available for discretionary spending. Whats
worse, more pressure is then exerted to use tax increases to fund
mandatory spending programs, such as Social Security, Medicare, and
Medicaid. We all know government spends more than it collects. The
federal interest burden exists simply because government must
actually service its debt. Interest, of course, represents the cost
of debt service. Daniel J. Pilla 21. Those who have held the
highest offices in America throughout history
have continually warned that our fiat/debt-based monetary system
was unsustainable.
The eyes of our citizens are not sufficiently open to the true
cause of our distress. They ascribe them to everything but their
true cause, the banking system; a system which if it could do good
in any form is yet so certain of leading to abuse as to be utterly
incompatible with the public safety and prosperity. The Central
Bank (now the Federal Reserve) is an institution of the most deadly
hostility existing against the principles and form of our
Constitution. Thomas Jefferson (1743 1826) I place economy among
the first and most important virtues, and public debt as the
greatest of dangers. To preserve our independence, we must not let
our rulers load us with perpetual debt. Thomas Jefferson World GDP
is around $65 trillion but the latest Bank for International
Settlements (BIS) statistics on outstanding derivatives contracts
(Wall Street bets) indicate that they are currently $707* trillion
as of June 2011 at face value (the true numbers are in the
Quadrillions or more according to some sources). This means that
the banks are betting over ten times the worlds GDP against each
other, for each derivative (Las Vegas styled bet) is a bet against
a counterparty. It is a matter of simple mathematics to realize the
western fiat debt-based banking system is doomed. That means for
every winner there is an equal loser. Some very big banks have
certainly lost more money than exists in the real world.*See BIS
2008; the notional amount of a derivatives contract refers to
thevalue or nominal amount of the underlying to the derivatives
contract; outstanding refers to open derivatives contracts that are
held by market participants. 13) See BIS 2008 and WFE statistics
(www.world-exchanges.org). Benjamin fulford
A HOUSE OF CARDS SKILLFULLY ENGINEERED TO BRING DOWN THE ECONOMY
22. The Conspirators meticulously crafted a scheme to control the
collapse of our
monetary system through a manufactured Depression in order to
control We, the People, for when the masses are in survival-mode
they are far easier to manipulate. The Federal Reserve definitely
caused the great depression by contracting the amount of currency
in circulation by one third from 1929 to 1933. Milton FriedmanNobel
Prize winning economist and Stanford University Professor
It must be realized that whoever controls the volume of money in
any country is absolutely master of all industry and commerce. And
when you realise that the entire system is very easily controlled,
one way or another, by a few powerful men at the top, you will not
have to be told how periods of inflation and depression originate.
President James Garfield(18311881) 20th President of the United
States
23.
The Great Recession was artificially created by the Federal
Reserve through its
ability to control interest rates (which we will explore in
detail). The bubble they created and its
subsequent depression caused a panic where people sold, and are
currently selling, their assets for pennies on the dollar in order
to survive. The Conspirators then cunningly acquire these assets
with the fake money they create out of thin air, and acquire every
commodity needed to control every aspect of life thus rendering We
the People of this world, enslaved to the Conspirators for He who
has the gold, indeed makes the rules. 24. The Conspirators scheme
was catalyzed by Mortgage-Backed Securities (MBS),
Warren Buffet referred to in 2002 as weapons of mass financial
destruction. These bonds were styled after Michael Millikens
high-yield junk bond scheme which he developed in the 1980s that
landed him in jail. However, the Mortgage-backed securities of the
2000s evolved as they were insured by Credit Default Swaps which in
2009 Economist and writer for Atlantic Monthly, Charles Davi
referred to as: the destroyer of economies. 25. MBSs were sold to
Pension funds throughout the world ensuring that the
cancerous tentacles created by the Conspiracy would spread and
cause a collapse so deep and widespread that We, the People of the
world would one day be on our knees begging for mercy at which time
the Conspirators will unveil their new Monetary system which grants
to them the complete and absolute control over our worlds monetary
system. I care not what puppet is placed upon the throne of England
to rule the Empire on which the sun never sets. The man that
controls Britain's money supply controls the British Empire, and I
control the British money supply. Baron Nathan Mayer Rothschild
(1840 1915)
1984 GRACE COMMISSION REPORT VALIDATES THE IMPENDING COLLAPSE
26. In 1984, President Reagan appointed the Grace Commission to
find ways to cut
the waste and inefficiency in the government, instructing its
members to "be bold" and "work like tireless bloodhounds; not to
leave any stone unturned in your search to root out inefficiency."
However, what the commission discovered was shocking: One-third of
all income taxes is consumed by waste and inefficiency in the
federal government, and another one-third escapes collection owing
to the underground economy. With two thirds of everyones personal
income taxes wasted or not collected, one hundred percent of what
is collected is absorbed solely by interest on the Federal debt and
by the Federal Government
contributions to transfer payments. In other words, all
individual income tax revenues are gone before one nickel is spent
on services which taxpayers expect from their Government. 27. The
Commission warned:
If fundamental changes are not made in Federal spending, as
compared with the fiscal 1983 deficit of $195 billion, a deficit of
over ten times that amount, $2 trillion, is projected for the year
2000, only 17 years from now. In that year, the Federal debt would
be $13.0 trillion and the interest alone would be $1.5 trillion per
year. 100 percent of what is now collected (as taxes) is absorbed
solely by interest on the Federal debt and by Federal Government
contributions to transfer payments. In other words, all individual
income tax revenues are gone before one nickel is spent on the
services which taxpayers expect from their Government. 28. If 100
percent of what was collected as revenue in 1982 was absorbed
solely by
interest on the Federal debt, that compounding interest could
only grow exponentially with each successive year even if the
national debt were not to increase. The Conspirators were well
aware of this fact but did nothing, as their power is based upon
their complete and absolute control of the monetary and banking
systems. Since 1982, our national debt has risen exponentially as a
result of the continual wars we have been engaged in since that
time which has brought our economic system to the brink of
collapse. THE CONSPIRATORS HAVE THEIR FINGER ON THE TRIGGER OF
ECONOMIC COLLAPSE 29. The Conspirators have orchestrated events so
that they now have their finger on
the trigger of economic collapse. The Conspirators own and
control the five largest banks in our country: JP Morgan Chase,
Citigroup, Bank of America, HSBC, and Goldman Sachs. These banking
institutions also control the International Swaps and Derivatives
Association (ISDA) which determines when and if a credit event
occurs in the Derivatives (MBS) market. If a credit event is
determined, that determination initiates the pay off of Credit
Default Swap bets. 30. These same 5 Conspirator-owned banks hold
nearly 95 percent of the industrys
total exposure to derivatives contracts which now stands at $707
Trillion an amount far exceeding their ability to pay off Credit
Default Swap bets which now stand at $32,409 Trillion. Therefore,
if the ISDA initiates a credit event, determined by a default or
write-down of Greek bonds, for instance, the Conspirators can bring
about the collapse of their own banking
institutions, which in turn, will bring about the collapse of
the worlds banking systems. Thus, the worlds economy is now resting
upon whether these 5 banks declare a default. In other words, the
system the banks created is a House of Cards just waiting for a
single card to fall. THE NONFEDERAL RESERVE 31. Among the
critically placed Conspirators are the Insiders at the Federal
Reserve
(Fed) ; a privately held corporation, a central bank at the helm
of the American economy, for it possesses the power to manipulate
the economic system of the United States. The passage of the
Federal Reserve Act proved every allegation Thomas Jefferson had
made against a central bank in 1791: that the subscribers to the
Federal Reserve Bank stock had formed a corporation, whose stock
could be and was held by aliens; that this stock would be
transmitted to a certain line of successors; that it would be
placed beyond forfeiture and escheat; that they would receive a
monopoly of banking, which was against the laws of monopoly; and
that they now had the power to make laws, paramount to the laws of
the states. No state legislature can countermand any of the laws
laid down by the Federal Reserve Board of Governors for the benefit
of their private stockholders. This board issues laws as to what
the interest rate shall be, what the quantity of money shall be and
what the price of money shall be. All of these powers abrogate the
powers of the state legislatures and their responsibility to the
citizens of those states. Eustace mullinsSecrets of the Federal
Reserve pg 35
32.
Throughout the history of the United States, many in government
fought to oust
the central banking system utilized on and off for hundreds of
years, but in a covert move in 1912, the Conspirators devised a
plan to seize control the monetary system once and for all and
called it the Federal Reserve System. We, the People presumed that
the federal Reserve was actually part of our government, but the
name was a ruse as the Fed was established solely for the Bankers
so that they could exert Power over our government which, in
reality, is not a democracy but an Oligarchy. 33. According to the
Federal Reserves website: The Federal Reserve is independent
within government in that its monetary policy decisions do not
have to be approved by the President or anyone else in the
executive or legislative branches of government. Its authority is
derived from statutes enacted by the U.S. Congress and the System
is subject to Congressional oversight.
34.
When the Federal Reserve came into being in 1913 it was opposed
by many, but
those voices were not heard because the Conspirators knew that
in order to control the masses, they also had to control the media,
which they quickly bought up and to this day, own and control.
HISTORY IS REPEATED 35. The Conspiracy began long ago as evidenced
by the following pamphlet
published by the United States Bankers Association in 1892: We
(the bankers) must proceed with caution and guard every move made,
for the lower order of people are already showing signs of restless
commotion. Prudence will therefore show a policy of apparently
yielding to the popular will until our plans are so far consummated
that we can declare our designs without fear of any organized
resistance. The Farmers Alliance and Knights of Labor organizations
in the United States should be carefully watched by our trusted
men, and we must take immediate steps to control these
organizations in our interest or disrupt them. At the coming Omaha
Convention to be held July 4th (1892), our men must attend and
direct its movement, or else there will be set on foot such
antagonism to our designs as may require force to overcome. This at
the present time would be premature. We are not yet ready for such
a crisis. Capital must protect itself in every possible manner
through combination (conspiracy) and legislation. The courts must
be called to our aid, debts must be collected, bonds and mortgages
foreclosed as rapidly as possible. When through the process of the
law, the common people have lost their homes, they will be more
tractable and easily governed through the influence of the strong
arm of the government applied to a central power of imperial wealth
under the control of the leading financiers. People without homes
will not quarrel with their leaders. History repeats itself in
regular cycles. This truth is well known among our principal men
who are engaged in forming an imperialism of the world. While they
are doing this, the people must be kept in a state of political
antagonism. The question of tariff reform must be urged through the
organization known as the Democratic Party, and the question of
protection with the reciprocity must be forced to view through the
Republican Party. By thus dividing voters, we can get them to
expand their energies in fighting over questions of no importance
to us, except as teachers to the common herd. Thus, by discrete
action, we can secure all that has been so generously planned and
successfully accomplished.
36.
Equally revealing is the following article posted on December
13, 2011 by
Washingtons Blog entitled: Fraud By The Big Banks More Than
Anything Done By The Little Guy Caused The Financial Crisis, as it
too reveals that a conspiracy is indeed unfolding today: The U.S.
Treasurys Office of Thrift Supervision Noted Last Year: The FBI
estimates that 80 percent of all mortgage fraud involves
collaboration or collusion by industry insiders This confirms what
one of the countrys top fraud experts has said for years: that it
was fraud by the big banks more than anything done by the little
guy which caused the financial crisis: William K. Black professor
of economics and law, and the senior regulator during the S & L
crisis explained last month before to the Financial Crisis Inquiry
Commission why banks gave home loans to people who they knew
couldnt repay. The whole piece is a must-read, but here are
excerpts from the introduction: The data demonstrate conclusively
that most liars loans were fraudulent, which means that there were
millions of fraudulent mortgage loans because liars loans became
common (Credit Suisse estimates that they represented 49% of new
originations by 2006). The data also demonstrate that even minimal
underwriting of the loan files was sufficient to detect the
overwhelming majority of such fraudulent liars loans. No honest,
rational lender would make large numbers of liars loans. The
epidemic of mortgage fraud was so large that it hyper-inflated the
housing bubble, which allowed refinancing to further extend the
life of the bubble (and the depth of the ultimate Great Recession.
In the cases where there have been even minimal investigations (New
Century, Aurora/Lehman, Citi, WaMu, Countrywide, and IndyMac)
senior lender officials were aware that liars loans were
fraudulent. Liars loans optimized short-term accounting income by
creating a sure thing (Akerlof & Romer 1993). A fraudulent
lender optimizes short-term fictional accounting income and longer
term (real) losses by following a four-part recipe: A. Extreme
Growth B. Making bad loans at a premium yield C. Extreme leverage
D. Grossly inadequate loss reserves. Note that this same recipe
maximizes fictional profits and real losses. This destroys the
lender, but it makes senior officers that control the lender
wealthy. This explains Akerlof & Romers title Looting The
Economic Underworld of Bankruptcy for Profit. The failure of the
firm is not a failure of the fraud scheme. (Modern bailouts HAVE
recapitalized the looted bank and left the looters in charge of
it.) The first two ingredients are related. Home lending is a
mature, reasonably competitive industry. A lender cannot grow
extremely rapidly by making good loans. If he tried, hed have to
cut his yield and his competitors would respond. His income would
decline. But he can guarantee the ability to grow extremely rapidly
by being indifferent to loan quality and charging weaker credit
risks, or more nave borrowers, a premium yield. In order to become
indifferent to loan quality the officers controlling the lender
must eviscerate its underwriting. There is no honest reason for a
secured lender to seek or permit inflated appraisal values. This is
a sure marker of accounting control fraud a marker that juries
easily understand. In other words, banks made loans to borrowers
who they knew couldnt really repay because the heads of the
banks could make huge bonuses based on high volumes and
fraudulent appraisals, and they didnt care if their own companies
later failed. In short, they looted their companies and the economy
as a whole. Professor Black brings us current to where we are
today: History demonstrates that if the control frauds get away
with their frauds, they will strike again. By allowing the banks to
use their political power to gimmick the accounting rules to permit
them to hide their massive losses on liars loans we have made it
far harder to take effective administrative, civil, and criminal
sanctions against the elite frauds that caused the Great Recession.
Hiding the losses also adopts the dishonest Japanese approach that
cripples economic recovery and public integrity. Prosecuting the
elites control frauds can be done successfully. Create a new Top
100 priority list and appoint regulators that will make supporting
the Justice Department a top agency priority. Thats how we obtained
over 1000 priority felony convictions of elite S&L criminals.
No controlling officer of a large, non-prime specialty lender has
been convicted of running a control fraud. Only one has even been
indicted. The FBI has written that any discussion of the crisis
that ignores the role of mortgage fraud is irresponsible.But
instead of prosecuting fraud, the government just continues to
cover it up. THE CREATION OF MONEY 37. The Conspirators were able
to perpetrate this scheme because few understand the
mechanics of the monetary system employed by the U.S.: All the
perplexities, confusion and distress in America arise, not from the
defects of the constitution or confederation, not from want of
honour or virtue, so much as from the downright ignorance of the
nation, of coin, credit and circulation. President John Adams
(17351826) I believe that banking institutions are more dangerous
to our liberties than standing armies and that the principle of
spending money to be paid by posterity, under the name of funding,
is but swindling futurity on a large scale. If the American people
ever allow private banks to control the issue of their currency,
first by inflation, then by deflation, the banks... Will deprive
the people of all property until their children wake-up homeless on
the continent their fathers conquered... The issuing power should
be taken from the banks and restored to the people, to whom it
properly belongs. President Thomas JeffersonThe Debate Over The
Recharter Of The Bank Bill, (1809)
38.
The underlying methods employed by the banking industry began
centuries ago
according to Modern Money Mechanics, a booklet published by the
Federal Reserve: It started with goldsmiths. As early bankers, they
initially provided safekeeping services, making a profit from vault
storage fees for gold and coins deposited with them. People would
redeem their "deposit receipts" whenever they needed gold or
coins to purchase something, and physically take the gold or
coins to the seller who, in turn, would deposit them for
safekeeping, often with the same banker. Everyone soon found that
it was a lot easier simply to use the deposit receipts directly as
a means of payment. These receipts, which became known as notes,
were acceptable as money since whoever held them could go to the
banker and exchange them for metallic money. Then, bankers
discovered that they could make loans merely by giving their
promises to pay, [rigging the system to their advantage] or bank
notes, to borrowers. In this way, banks began to create money. More
notes could be issued than the gold and coin on hand because only a
portion of the notes outstanding would be presented for payment at
any one time. Enough metallic money had to be kept on hand, of
course, to redeem whatever volume of notes was presented for
payment. 39. Thus, the fractional reserve system of banking was
born, where a deposit in the
form of cash, or a promissory note can be used by the bank to
monetize or create 9X the amount of the deposit. The key to the
whole operation lay in the public's willingness to leave their
assets in the bank's vaults and use the bank's notes. This system
is based on the faith and ignorance of the people which allows the
banks to use the assets they have on deposit, set aside 10% of
those deposits as a reserve (capital requirement) and loan out the
remainder thus earning a profit on the spread between what they
paid for the wholesale money at the Fed discount window, and the
amount they charged to the borrower. The actual process of money
creation takes place primarily in banks ... bankers discovered that
they could make loans merely by giving their promise to pay, or
bank notes, to borrowers. In this way banks began to create money.
Transaction deposits are the modern counterpart of bank notes. It
was a small step from printing notes to making book entries
crediting deposits of borrowers, which the borrowers in turn could
spend by writing checks, thereby printing their own money. Modern
Money MechanicsFederal Reserve Bank of Chicago
40.
Throughout history this system allowed the Bankers to get rich
while most
everyone else got by. It created an unfair system where those at
the top who controlled the money had the power, while everyone else
unknowingly was enslaved. 41. When a borrower takes out a bank loan
or mortgage, the bank does not use its
own funds but goes to the Fed where it [electronically] receives
10 times the amount of the loan in new currency. Ten percent of
this money is allocated to the borrower, 10%, held in reserve by
the bank and the remaining 80%, allocated to the bank to lend or
invest.
A deposit created through lending is a debt that has to be paid
on demand of the depositor, just the same as the debt arising from
a customer's deposit of checks or currency in the bank. Of course
they [the banks] do not really pay out loans from the money they
receive as deposits. If they did this, no additional money would be
created. What they do when they make loans is to accept promissory
notes in exchange for credits to the borrowers' transaction
accounts. Federal Reserve BankChicago, Modern Money Mechanics, p.
6
Banks create credit. It is a mistake to suppose that bank credit
is created to any extent by the payment of money into the banks. A
loan made by a bank is a clear addition to the amount of money in
the community. Encyclopdia Britannica 14th Edition What they
[banks] do when they make loans is to accept promissory notes in
exchange for credits to the borrowers transaction accounts. Modern
Money Mechanics, pg 6 The initial $10,000 of reserves distributed
within the banking system gives rise to an expansion of $90,000 in
bank credit (loans and investments) and supports a total of
$100,000 in new deposits under a 10 percent reserve requirement.
The deposit expansion factor for a given amount of new reserves is
thus the reciprocal of the required reserve percentage (1/.10 =
10). Loan expansion will be less by the amount of the initial
injection. Modern Money MechanicsFederal Reserve Bank of Chicago -
pg 8
42.
In the events leading up to the economic crisis, the
Conspirators controlled both
the Federal Reserve (Fed) and the banks and used the Fractional
Reserve System to rape the system. The Conspirators used borrowers
promissory notes as deposits and monetized 9X their face value
through the Fed. When the Fed issues credit to the bank, it sells
the credit/money at a discount interest rate. The bank charges the
borrower a higher rate and profits from the difference. The
Fed/Treasury lists the loan as a demand deposit a liability and the
Note as an asset on its books thus canceling each other out. These
transactions are governed by the GAAP (Generally Accepted
Accounting Principles) which banks must employ. However, the Bank
must then pay the Fed for the use of this credit through the
borrowers mortgage payments, but the Conspirators ledgered the
liability on the PUBLIC side (the Fed) and ledgered the asset on
the PRIVATE side, as their own asset and continued to use borrowers
NOTEs over and over again. 43. The Conspirators then used the same
Notes and pretended to sell them to
investors of the MBS which had pre-funded the borrowers loans
with TBA (to be announced)
funds brazenly violating the Pooling and Servicing Agreements
established by the MBS Trusts. The Conspirators held the Notes
which should have been delivered to the MBS Trustees according to
New York law which governs the securities, and sold the same notes
repeatedly to multiple trusts. The Notes were simply copied in
order to sell these notes to MBS investors both here and abroad and
so they could be used once again to validate ownership in
foreclosure cases according to the FCIC report as of January 2011:
Goldman Sachs alone packaged and sold $73 billion in MBSs from July
1, 2004 to May 31, 2007. These MBSs referenced more than 3,400
mortgage securities, with 610 of them referenced at least twice.
This is apart from how many times these securities may have been
referenced in synthetic CDOs created by other firms. TITLE CRISIS
44. The Conspirators needed to divert the attention of the masses
so as to delay the public from discovering their Conspiracy
prematurely. They accomplished said distraction in myriad ways, one
being the creation of a title crisis. The Conspirators
intentionally failed to record the conveyance transactions of real
estate at the county level and bypassed the law completely by
creating their own recording database called the Mortgage
Electronic Registration System (MERS) - a secretive veil which
would allow them to hide their crimes. 45. The Conspirators not
only failed to record these conveyances, but in failing to
deliver the Notes to the Trusts, in direct violation of the
governing documents of the Trust, a cloud is created on the titles
of nearly every property in the U.S. according to Professor Adam
Levitins testimony as stated below. 46. In sworn testimony by Linda
De Martini supervisor and operational team leader
for the Litigation Management Department for BAC Home Loans
Servicing L.P. in Kemp V Countrywide, BAC Servicing testified that
Countrywide NEVER delivered the notes to the trusts. Again, any
rational person would ask why. 47. and stated: Professor Adam
Levitin testified before the House Financial Services Committee
If mortgages were not properly transferred in the securitization
process, then mortgage-backed securities would in fact, not be
backed by any mortgages whatsoever. The chain of title concerns
stem from transactions that make assumptions about the resolution
of unsettled law. If those legal issues are resolved differently,
then there would be a failure of the transfer of mortgages into
securitization trusts, which would cloud title to nearly every
property in the United States and would create contract
rescission/putback liabilities in the trillions of dollars, greatly
exceeding the capital of the USs major financial
institutions.Recently, arguments have been raised in foreclosure
litigation about whether the notes and mortgages were in fact
properly transferred to the securitization trusts. This is a
critical issue because the trust has standing to foreclose if, and
only if it is the mortgagee. If the notes and mortgages were not
transferred to the trust, then the trust lacks standing to
forecloseIf the notes and mortgages were not properly transferred
to the trusts, then the mortgage-backed securities that the
investors purchased were in fact non-mortgage-backed securities. In
such a case, investors would have a claim for the rescission of the
MBS, meaning that the securitization would be unwound, with
investors receiving back their original payments at par (possibly
with interest at the judgment rate). Rescission would mean that the
securitization sponsor would have the notes and mortgages on its
books, meaning that the losses on the loans would be the
securitization sponsors, not the MBS investors, and that the
securitization sponsor would have to have risk-weighted capital for
the mortgages. If this problem exists on a wide-scale, there is not
the capital in the financial system to pay for the rescission
claims; the rescission claims would be in the trillions of dollars,
making the major banking institutions in the United States would be
insolvent. FORECLOSURE CRISIS 48. The Conspirators intentionally
created a complex sham intended to create chaos
in the courts thereby burdening them with millions of
foreclosures. The defaults began with the subprime mortgages, but
this momentum soon trickled up to long-standing mortgages where
borrowers had amassed a great deal of equity in their properties
which would soon be lost to plummeting real estate values. 49. The
Conspirators instructed the courts to accelerate the foreclosures
under the
guise that the economy would then stabilize. But sooner or later
the public and the courts would learn the truth, so the
Conspirators had to make sure their plan so deeply embedded in
society that there could be no escape from the consequences of the
economic collapse, just as the Bankers pointed out in their 1892
pamphlet:
for the lower order of people are already showing signs of
restless commotion. Prudence will therefore show a policy of
apparently yielding to the popular will until our plans are so far
consummated that we can declare our designs without fear of any
organized resistance.
LAYING THE GROUNDWORK FOR COLLAPSE
50.
The Conspirators methodically laid the groundwork which would
create a new
mortgage lending infrastructure where the era of fiduciary
relationships was thrown out the window. The values upon which
America was founded would be exploited as the Conspirators knew
that Americans and the courts would presume that highly respected
lending institutions operated from a foundation of trust. 51. The
Conspirators attempted to disguise their scheme in a complex
language
they concocted which was designed to confuse, confound and
overwhelm the average person thus enabling them to carry out their
plan. Monetary science, finance and economics are mired in a
convoluted language. Economics experts propagate multiple terms and
multiple definitions for those terms. This quagmire hinders the
ability of individuals outside the economic elite to reach
reasonable conclusions. Because the current system is inherently
unsound, unstable and unethical, those who perpetuate it must
attempt to keep those it abuses in ignorance, ensuring they are
confounded and misdirected from the true issues. - Trace
MayerMonetary scientist and author of The Great Contraction
DEREGULATION 52. The objective of the Conspirators could not be
realized if the banking industry
was regulated, so in the 1990s a series of events, beginning
with the merger of Citibank and Travelers Insurance in 1998,
illegal at the time, began to unravel the long-standing regulations
which ensured that catastrophes like the Great Depression could not
occur again. Because the merger of Citibank and Travelers Insurance
violated the Glass-Steagall Act, enacted in 1934 to separate
commercial banking from investment banking to prevent Wall Street
and the largest banks from gambling and risking the deposits of
others, the Conspirators had to repeal the GlassSteagall Act.
53.
The Conspirators knew that Congress would do their bidding
because as Illinois
Senator Dick Durbin stated on April 29, 2009: "the banks, hard
to believe in a time when we're facing a banking crisis that many
of the banks created, are still the most powerful lobby on Capitol
Hill. And they frankly own the place." They indeed own the place as
a result of paying Billions to lobbyists. New legislation quickly
passed which began to dismantle the GlassSteagall Act and the
Citi-Travelers merger paved the way for the Conspirators scheme to
unfold. 54. Furthermore, the repeal of the Glass-Steagall Act
effectively opened the door for
the securitization of mortgage loans - the catalyst needed to
collapse the economy. SHIFTING THE RISK FROM THE CONSPIRATORS TO
THE SHAREHOLDERS 55. In 1998, the Conspirators shielded any
potential risk away from themselves by
converting the once privately-held investment banks on Wall
Street into publicly-held corporations, thereby shifting risk to
the hapless shareholders of those companies. As a result of this
paradigm shift, compensation on Wall Street and the largest banks
rose meteorically which afforded the Conspirators the means to
invest even more Billions of dollars in lobbying efforts to ensure
their control of Washington. By bankrolling the elections of those
they wanted in office, those who would protect their interests,
they made sure these people remembered who put them in that office.
DISEMPOWERING THE MIDDLE CLASS 56. The Conspirators sought to deter
the American public from recognizing their
scheme by systematically disempowering the middle class of
America. In 1994 the Democrats and Republicans passed NAFTA which
sent 50,000 manufacturing plants overseas, hence a loss of jobs and
revenue for the government through taxes, under the guise of
fulfilling their obligation of making profit for their
shareholders. By obliterating jobs, they forced the middleclass
into survival-mode, thereby robbing the American people of their
pensions, and assets, thus rendering them impotent, shamed,
humiliated and focused on supporting their families. The
foreclosure crisis, a tactic they had employed in the past, was
used to destabilize Americans and strip them of their assets.
DIVIDE AND CONQUER
57.
To distract and divert the attention of the public, thereby
delaying the premature
discovery of the Conspiracy and potentially stopping it, the
Conspirators have and still are employing an effective strategy
known as divide and conquer. This strategy is being carried out to
extreme absurdity today by filling the airwaves with dissension
between Americas two political parties on the most ridiculous,
inconsequential and trivial issues which trigger emotion. As they
pit one side against the other, the Conspirators pour fuel upon
these issues and maintain a constant state of chaos in the
population. CREATING A WEAPON OF MASS FINANCIAL DESTRUCTION:
MORTGAGEBACKED SECURITIES 58. The final desecration of the
Glass-Steagall Act in 1998-1999 opened the door for
the Conspirators to introduce new innovative products into the
American marketplace known as Mortgage Backed Securities (MBSs).
These securities played an integral role in the Conspirators scheme
as they were designed to earn high fees, to make money out of
nothing, create widespread fraud which would contribute to lawsuits
whose settlements would be so great and so widespread that said
settlements could result in the collapse of the financial
institutions; and over-leveraging the institutions to such a great
degree that the Conspirators would have yet another means of
collapsing the economy. These securities were backed by the
valuable promissory notes on borrowers homes and considered to be a
low risk investment as providing a roof over ones familys head is a
priority to American families. 59. After a borrower closed on a
mortgage, that mortgage would be combined with
other similar mortgages and converted into a securitized
instrument. These instruments would be pooled together and create a
Collateralized Debt Obligation (CDO) where pieces of that pool were
sold as bonds to investors all over the world referred to as
certificateholders. 60. The Conspirators needed both borrowers and
investors, each a pawn in a much
larger game they were unaware of - a pervasive scheme where the
Conspirators could exploit them in order to rob the world and
collapse the economy. 61. The Conspirators churned out MBSs by the
millions despite the fact that they
were taking enormous risks which many on Wall Street found to be
both incredulous and irrational. These investments over-leveraged
their respective companies with (high-risk) MBS
securities. The risk was clear: if anything were to go wrong in
the market, the investment company would fail; exactly what the
Conspirators set out to do as it provided a cover of plausible
deniability. 62. The January 2011 Financial Crisis Inquiry
Commission (FCIC) Report - Pg
230- Commission Conclusions on Chapter 11 -The Bust stated that
over-leverage was indeed a major cause of the financial crisis: The
Commission concludes that the collapse of the housing bubble began
the chain of events that led to the financial crisis. High
leverage, inadequate capital, and short-term funding made many
financial institutions extraordinarily vulnerable to the downturn
in the market in 2007. The investment banks had leverage ratios, by
one measure, of up to 40 to 1. This means that for every $40 of
assets, they held only $1 of capital. Fannie Mae and Freddie Mac
(the GSEs) had even greater leveragewith a combined 75 to 1 ratio.
Leverage or capital inadequacy at many institutions was even
greater than reported when one takes into account window dressing,
off-balance-sheet exposures such as those of Citigroup, and
derivatives positions such as those of AIG. The GSEs contributed
to, but were not a primary cause of, the financial crisis. Their $5
trillion mortgage exposure and market position were significant,
and they were without question dramatic failures. They participated
in the expansion of risky mortgage lending and declining mortgage
standards, adding significant demand for less-than-prime loans.
However, they followed, rather than led, the Wall Street firms. The
delinquency rates on the loans that they purchased or guaranteed
were significantly lower than those purchased and securitized by
other financial institutions. INFLATING THE BUBBLE 63. The Fed has
the ability to intentionally create a bubble by lowering interest
rates,
as credit is then plentiful which opens the market for increased
debt. To prevent a bubble from inflating, the Fed must slowly raise
interest rates for if it does not, a bubble will result. 64.
According to the Federal Reserve website:
A higher Fed funds rate means banks are less willing to borrow
money to keep their reserves at the mandated level. This means they
will lend less money out, and the money they do lend will be at a
higher rate since they themselves are borrowing money at a higher
rate. Since loans are more difficult to get and more expensive,
businesses will be less likely to borrow, thus slowing the economy.
When the Fed raises rates, it is called contractionary monetary
policy.
65.
The consequence of a bubble is inflation for each new loan
monetizes 10
times its amount thereby adding to the amount of money in
circulation which in turn devalues the dollars currently in
circulation. According to the inflation calculator at CoinNews.net,
validated by numerous sources, if you were to purchase on item in
1913 for $20.00, the year the Fed was established, that same item
would cost $454.42 in 2012. 66. The Conspirators chose real estate
as the vehicle to fuel their bubble because, as
Chairman of the Federal Reserve, Ben Bernacke stated in 2005
amid warnings of a bursting real estate bubble: Historically, real
estate has never dropped in value and therefore there is no bubble.
Bernacke made this statement despite the fact that at that time,
irrefutable evidence existed to the contrary. 67. In 2002 the
Federal Reserve began to inflate the bubble needed to achieve
the
Conspirators objective and lowered interest rates from 6.5% to
1.25% which made credit easy to obtain. These low rates initiated a
feeding frenzy and as anticipated, unwary borrowers took the bait.
The market, now flooded with homebuyers, artificially drove up
property values which resulted in home prices doubling from 1996 to
2006. If the American people ever allow private banks to control
the issue of their currency, first by inflation, then by deflation,
the banks... Will deprive the people of all property until their
children wake-up homeless on the continent their fathers
conquered... The issuing power should be taken from the banks and
restored to the people, to whom it properly belongs. President
Thomas JeffersonThe Debate over the Recharter of the Bank Bill,
(1809)
By a continuing process of inflation, governments can
confiscate, secretly and unobserved, an important part of the
wealth of their citizens....while the process impoverishes many, it
actually enriches some. There is no subtler, no surer means of
overturning the existing basis of society than to debauch the
currency. The process engages all the hidden forces of economic law
on the side of destruction, and does it in a manner which not one
man in a million is able to diagnose. John Maynard Keynes
(18831946)British Economist 1919-Economic Consequences of Peace
CREATING LOANS DESIGNED TO DEFAULT
68.
To fuel the real estate bubble, the Conspirators needed a great
quantity of
mortgage loans which would have a high percentage of default,
not if, but when the Conspirators raised interest rates. Under the
altruistic guise of helping more people to achieve the American
dream, the non-partisan Conspirators instructed their cronies in
Congress to enact laws in both the Bush and Clinton administrations
which created a whole new market of borrowers. One of those new
laws was the Community Reinvestment Act which made it illegal for a
bank not to grant a loan to a sub-prime borrower. In the past,
these borrowers were unable to secure mortgages because they did
not meet underwriting guidelines designed to protect lenders from
default. But the Conspirators didnt care about underwriting
guidelines as they needed loans which would default, so they
exploited these borrowers. 69. The Conspirators enticed more
borrowers into their web of deceit with a bevy of
new mortgage products: no-document loans, stated income loans,
100% of purchase loans, and adjustable rate mortgages, which
allowed borrowers to obtain loans under suspicious circumstances.
To lure even more unsuspecting borrowers into loans they could not
afford if interest rates rose, the lenders offered teaser interest
rates as low as 1.00% for a specified length amount of time. These
teaser rates delayed the onset of the true higher payments which
would go into effect at a specified time in the future determined
by the prevailing interest rates at that specific time. In other
words, if interest rates rose, borrowers payments would rise
exponentially. And these loans had a far greater chance of default
because they were designed to default. 70. These loans were replete
with fraud as countless lawsuits have attested, but the
Conspirators did not care. To ensure that the loans would
default, the Conspirators set up conditions which induced bank
employees with bonuses, high salaries. If that tactic was
unsuccessful, the employees were threatened with the loss of their
jobs if they didnt produce loans ...and fast! Bank employees were
pushed to relax or completely eliminate underwriting standards,
inflate appraisals; essentially telling borrowers anything to get
them to sign loan documents. *See sworn testimony from bank
employees at the end of this document. 71. Borrowers were unaware
that their notes were being converted into securities,
pooled together with other mortgages and sold to investors, with
the majority of the loans pre-
funded by the MBS investors who had advanced funds according to
the Federal Reserve Bank of New York Staff Reports entitled TBA
Trading and Liquidity in the Agency MBS Market by James Vickery and
Joshua Wright, Staff Report No. 468 - August 2010: A less widely
recognized feature is the existence of a liquid forward market for
trading agency MBS, out to a horizon of several months.3 The
liquidity of this market raises MBS prices and improves market
functioning. It also helps mortgage lenders manage risk, since it
allows them to lock in sale prices for new loans as or even before
those mortgages are originated. The vast majority of agency MBS
trading occurs in this forward market, which is known as the TBA
market (TBA stands for to be announced). In a TBA trade, the seller
of MBS agrees on a sale price, but does not specify which
particular securities will be delivered to the buyer on settlement
day. Instead, only a few basic characteristics of the securities
are agreed upon, such as the coupon rate and the face value of the
bonds to be delivered. *3 In a forward contract, the security and
cash payment for that security are not exchanged until after the
date on which the terms of the trade are contractually agreed upon.
The date the trade is agreed upon is called the trade date. The
date the cash and securities change hands is called the settlement
date.
SECURITIZING THE LOANS 72. The process of Securitization was
designed to distance the Conspirators from
liability and rob citizens of Trillions of dollars. The
following is the securitization process: A. Mortgages loans are
obtained or originated by lenders: large banks, mortgage brokers
etc. B. The loans are then sold to a Sponsor - typically a
subsidiary of the originating bank created to distance the bank
from potential liability. This sponsor is called a "special purpose
vehicle/entity" "SPV"/SPE, and is a tax-exempt company or trust
which forms a passive shell which is bankruptcy remote, meaning
that if the original lender goes into bankruptcy, the assets of the
lender cannot be seized by the creditors of the bank. In order to
achieve this status, the governing documents of the bank restrict
its activities to those necessary to complete the issuance of
securities, for once the assets are transferred to the Sponsor/SPV,
there is normally no recourse to the originator. C. The Sponsor
assembles the newly-purchased loans into pools consisting of
approximately 5,000 mortgages. D. The Sponsor then sells the pool
of loans to a Depositor.
E. The Depositor issues the bonds/certificates created by the
Underwriter of a Conspirator-owned Wall Street Investment Bank
(Goldman Sachs) backed by the underlying mortgage loan. F. The
depositor establishes a trust and lays out the rules the trust must
follow according to a pooling and servicing agreement. G. The
depositor typically owns 100% of the beneficial interest in the
issuing entity and is usually the parent, or a wholly owned
subsidiary of the parent, which initiates the transaction. H. Each
trust issues Certificates which are sold to large institutional
investors. I. The depositor transfers loans to the Trust in
accordance with the PSAs. J. The Depositor works with the
Underwriter (Investment Bank such as Goldman Sachs) to sell the
securities to investors. K. Underwriters of Conspirator-owned Wall
Street Investment Banks pay the depositor with funds from the MBS
Investors. L. Underwriters convert loans into security bonds.
CREATING MBS BONDS FOR INVESTORS TO PURCHASE A. Registration
statements are filed with the Securities and Exchange Commission
(SEC) which includes a description of the offering, a prospectus
that explains the general structure of the investment. Prospectus
supplements contain specific detailed descriptions of the mortgage
pool. To lure unsuspecting investors, the Prospectus Supplements
purported to provide accurate statistics regarding the mortgage
loans in the collateral group and the entire securitization. B. The
investment banks set up the structure of the transaction.
C. Underwriters at the investment banks pre-sold bonds before
the loans were originated, which is referred to as forward selling.
D. MBS Certificates/bonds were categorized based upon risk into
various levels or tranches. The highest senior bonds carried the
lowest risk and were paid first whereas the lower tranches, while
paying a higher rate of interest, carried a higher risk. E. MBS
bonds were based upon specific criteria which placed each loan into
a specific tranche based upon the FICO credit score of the
borrower, loan-to-value ratio of the loan, outstanding principal
balance of the loans, geographic location, whether the loans were
for purchase or refinance purposes, a primary residence, second
home, or investment property, and information concerning when a
loan would be determined to be delinquent.
F. The most common securitization trusts, having lower yields,
were the Conspirator-owned (flagrantly run into the ground by
leveraging their assets 75:1) privately-held corporations, Fannie
Mae and Freddie Mac. Although these institutions are referred to as
government-sponsored enterprises, the title is misleading. G.
Investors desiring a higher yield purchased certificates from
private label securities firms, such as Goldman Sachs. H. Each
Certificate entitled the investor to a specified portion of the
mortgage payments based upon the level of perceived risk in the
certificates which were typically rated AAA. I. Investors acquired
a percentage of ownership interest in the cash flow from the
mortgage loan payments and in the promissory notes - the assets of
the trust, which were supposed to be held by the Trustee on behalf
of the certificate-holders. J. According to Investopedia, the MBS
Trust (its trustee being an agent for the Conspirators) typically
purchased credit default swap insurance as a credit enhancement
used to entice investors into thinking they were buying low-risk
investments which were guaranteed not to lose. All tranches
received periodic payments based on the cash flows from the credit
default swaps. K. If a credit event occurred, such as a mortgage
default, and reached a specific default percentage, starting from
the lowest tranche and working its way up that tranche would be
liquidated causing investors to lose their investment. But if the
certificates were covered by CDS insurance the investors were
compensated for their losses, if the insurance company was not
bankrupted as AMBAC (American Municipal Bond Assurance Corporation)
was in 2010. THE MONTH TO MONTH OPERATION FOR BORROWERS A. The
mortgage Servicer, an agent for the Conspirators, collects the
mortgage payments, take its fee off the top and passes the
remainder to trustee of the MBS trust, another agent of the
Conspirators. B. Servicers are responsible for collecting
delinquent loans and determining when to charge off a loan by
writing down its balance - a conflict of interest as the Servicers
fee is based upon the outstanding loan balance in the pool. C. The
Servicer, typically a subsidiary of the Conspirator parent
originator, therefore controlled by the Conspirator, has the power
to significantly affect the cash flows to the investors because it
controls the charge-offs and recoveries on the loans. D. Any income
remaining after payments and expenses is usually accumulated to
some extent in a reserve account which is returned to the
depositor. E. The Servicer is required to report key information
about the loans to the trustee.
F. According to the PSA (Pooling and Servicing Agreement), when
a loans defaults the loss is absorbed first by the lowest most
risky tranches, with the upper-level tranches remaining unaffected
until losses exceed the entire amount of the subordinated tranches
at which point the trust is dissolved and files a 15-15D report
with the SEC indicating its probable dissolution. G. The lowest
tranches, most exposed to payment risk, are retained by the
Conspirator-owned Originator knowing that when the loans default,
they will be first in line to collect CDS payments. H. The trustee,
as alleged gate-keeper of the Trusts assets, is part of the
Conspirator-owned SPV, which is typically wholly owned by the
Conspirator Originator. GAMING THE SYSTEM THE CONSPIRATORS CREATED
A. The loans made to borrowers were packaged and/or sold to variety
of Conspirator players, each earning a profit on each transaction.
B. The prospectus was created, the MBS rated, and the investors
money pledged before the homeowner ever applied for a loan. C. Each
MBS/Trust was required to keep a list of the individual loans they
had allegedly recruited for the MBS. This list has to be publicly
recorded with the SEC, however, the SEC did not require any proof
that the loans actually existed or were possessed by the MBS. D.
The underwriter earned a yield spread premium: the difference
between what the interest rate the loan was sold for and the
interest rate paid to the investors of the MBSs. E. The originator
was simply the liaison between the borrower and the Investor and
was paid a commission when the depositor purchased the loan from
the Sponsor. F. The Conspirators controlled the Servicer and
designed the PSA to ensure that when a loan defaulted the Servicer
would then advance loan payments on behalf of the defaulted
borrower. The Servicers fee was based upon the outstanding balance
of the pool, so if the loan was non-performing and the Servicer
reported it as such, it would earn less money. G. Servicing rights
are considered as assets with recognized value and called Mortgage
Servicing Assets (MSA) which are sold, assigned, and securitized.
H. A Master Mortgage Servicer receives a large fee called a service
release premium (SRP) when it sells its servicing rights, thus this
market is quite active. I. Additionally, the largest Servicers earn
billions on late fees they frequently create through
shenanigans.
J. The largest Servicers earn massive fees when a loan defaults:
late fees, penalties, etc. Therefore, the longer the loan is in
default, the Servicer accrues fees and interest payments which will
be paid when the home is foreclosed. K. The Servicer doesn't care
how much the foreclosed home sells for, as any amount which exceeds
their expenses is pure profit. CREDIT DEFAULT SWAPS AKA OVER THE
COUNTER (OTC) DERIVATIVES 73. The Atomic Bomb of the Conspirators
scheme, designed to catalyze the collapse
of the economy and rob untold Trillions from the public, were
the Credit Default Swaps, unregulated insurance policies taken out
on MBS bonds. Unlike a fire insurance policy where only one person
can take a policy on property in the event of a loss, credit
default swap insurance (more like a Las Vegas bet) could be sold to
many gamblers. And this wasnt a true bet, for the game was rigged.
The data clearly indicates that the predatory loans sold to
unsuspecting borrowers were designed to default. Therefore, the
Conspirators only had to sit back and wait for the dollars to pour
in while the economy collapsed piece by piece. 74. CDSs had little
risk and great reward according to the 2011 Financial Crisis
Inquiry Commission Report: ...entering into an equity swap that
mimicked the returns of someone who owned the actual stock may have
had some upfront costs, but the amount of collateral posted was
much smaller than the upfront cost of purchasing the stock
directly. Often no collateral was required at all. Traders could
use derivatives to receive the same gainsor lossesas if they had
bought the actual security, and with only a fraction of a buyers
initial financial outlay. The credit default swap (CDS), offered
the seller a little potential upside at the relatively small risk
of a potentially large downside. The purchaser of a CDS transferred
to the seller the default risk of an underlying debt. The CDS buyer
made periodic payments to the seller during the life of the swap.
In return, the seller offered protection against default or
specified credit events such as a partial default. If a credit
event such as a default occurred, the CDS seller would typically
pay the buyer the face value of the debt. 75. CDSs were a zero-sum
bet; for example, a bet on a MBS tranche that held $100
million in mortgages would cost $200,000. for that policy.
Therefore, when a specific percentage of mortgages in an MBS
tranche defaulted, each policy holder would be paid $100 Million!
Obviously, the insurance company (AIG, for example) which sold the
CDSs would have to have enough money to pay off the $100 Million to
each party who placed a bet which
required that the insurance companies have enough liquidity to
pay off the bets. A large percentage of defaults could easily
bankrupt the insurance company, for by 2008 the derivatives market
had ballooned to $45 trillion - the reason insurance giant AIG
would have been bankrupt it were not bailed out at the Conspirators
behest. What we have learned today is that the bailout money was
used to pay off the bets taken by the Conspirators at 100 cents on
the dollar! On page 347 of the 2011 Financial Crisis Inquiry
Commission Report, it was stated: On September 2, 2008 the New York
Feds Danielle Vicente noted: AIGs current liquidity position is
precarious and asset liability management appears inadequate given
the substantial off balance sheet liquidity needs. Liquidating an
$835 billion securities portfolio to cover liabilities [CDSs] would
mean substantial losses and potentially affect prices, she wrote.
Borrowing against AIGs securities through the Feds PDCF (New York
Fed: The Primary Dealer Credit Facility (PDCF) is an overnight loan
facility that will provide funding to primary dealers in exchange
for any tri-party-eligible collateral and is intended to foster the
functioning of financial markets more generally.) might allow AIG
to unwind its positions calmly while satisfying immediate cash
needs, but Vicente questioned whether the PDCF was necessary for
the survival of the firm. Arguably, however, AIGs volatile funding
sources made the firm vulnerable to runs. Off-balance-sheet
commitmentsincluding collateral calls, contract terminations, and
liquidity putscould be as high as $33 billion if AIG was
downgraded. Yet AIG had only $4 billion of revolving credit
facilities in addition to the $12 to $13 billion of cash it had on
hand at the time. Analysts worried about the losses in AIGs credit
default swaps and investment portfolios, about rating agency
actions, and about subsequent impacts on capital. 76. was stated:
Credit default swaps (CDS)fueled the mortgage securitization
pipeline. CDSs were sold to investors to protect against the
default or decline in value of mortgage-related securities backed
by risky loans. Companies sold protection to the tune of $79
billion, in AIGs case... helping to launch and expand the market
and, in turn, to further fuel the housing bubble. 77. To create the
circumstance of an economic death spiral and thus collect Trillions
In another excerpt from the 2011 Financial Crisis Inquiry
Commission Report it
on the credit default swap bets the Conspirators placed, it was
imperative that the loans default. Moreover, because credit default
swaps were integral to the success of the Conspirators scheme, all
obstacles which could derail the success of the scheme had to be
eliminated. ELIMINATING THE OBSTACLES
78.
One obstacle that could potentially deride the Conspirators
scheme was
Brooksley Born, Chairman of the Commodity Futures Trading
Commission (CFTC), the federal agency which oversees the futures
and commodity options markets. A lauded brilliant attorney and
expert in the field of derivatives, (MBS) Ms. Born analyzed the
potential risk of the unregulated derivative market and became
alarmed for she had the moxie to understand that something major
was awry. She then called Alan Greenspan, Chairman of the Federal
Reserve of the United States from 1987 to 2006, who became
surprisingly angry with her for recognizing this fact. Shaken, but
undaunted, and fueled by her conviction to protect the American
people, she lobbied Congress and President Clinton in 1998 in an
effort to regulate these derivatives and protect the American
economy. 79. However, in Congressional hearings, Conspirators, Alan
Greenspan, Larry
Summers, Secretary of the Treasury from 1999 to 2001, and Robert
Rubin, Secretary of the Treasury from 1995 to 1999, all of whom who
you would think would want to protect the public, instead fought
hard to keep derivatives unregulated and when challenged, displayed
a then perplexing contempt for Ms. Born as each vehemently opposed
her warnings collectively stating: We have grave concerns about
this action and its possible consequences. . . . We are very
concerned about reports that the CFTCs action may increase the
legal uncertainty concerning certain types of over-the-counter
(OTC) derivatives.* [*credit default swaps] In a revealing
irrational display of emotion shown in the Oscar-winning
documentary Inside Job, these Titans of Wall Street accused Ms.
Born of wanting to bring the economy of the United States down,
rather than trying to protect it! Alan Greenspan stated: Aside from
safety and soundness regulation of derivatives dealers under the
banking and securities laws, regulation of derivatives transactions
that are privately negotiated by professionals, is unnecessary. 80.
In September of 1998, Greenspan had changed his tune. The Federal
Reserve
Bank of New York orchestrated a $3.6 billion recapitalization of
Long-Term Capital Management (LTCM) by 14 major OTC derivatives
dealers. LTCM, an enormous hedge fund, had amassed more than $1
trillion of exposure in derivatives and $125 billion of securities
on a mere $4.8 billion of capital without the knowledge of federal
regulators. Greenspan then revealed that there was enormous risk
posed by unregulated derivatives and testified to Congress that in
the New York Feds judgment, LTCMs failure would potentially have
had
systemic effects: a default by LTCM would not only have a
significant distorting impact on market prices but also in the
process could produce large losses, or worse, for a number of
creditors and counter-parties, and for other market participants
who were not directly involved with LTCM. 81. Despite those
premonitions, in December 2000, the Conspirator-controlled
Congress passed the Commodity Futures Modernization Act of 2000
(CFMA), which shielded credit default swaps from virtually all
regulation or oversight by both the CFTC and the SEC. According to
the 2011 Financial Crisis Inquiry Commission Report: The enactment
of legislation in 2000 to ban the regulation by both the federal
and state governments of over-the-counter (OTC) derivatives was a
key turning point in the march toward the financial crisis.
EXPANDING THE CREDIT DEFAULT MARKET 82. At year-end 2000, when the
Commodity Futures Modernization Act law was
passed by Congress, the global exposure to these outstanding
bets was $95.2 trillion, meaning that when the mortgages defaulted,
the amount of money required to pay off the bet was $3.2 Trillion.
In June 2008 when the market peaked, this exposure increased
sevenfold to $672.6 trillion; with a gross market value of $20.3
Trillion, and in March 2012 stands at $707 Trillion with $34.9
Trillion in CDSs. 83. In the aftermath of the economic crisis,
Conspirator Greenspan testified to the
FCIC that credit default swapsa small part of the market when
Congress discussed regulating derivatives in the 1990s did create
problems during the financial crisis. Conspirator Larry Summers
testified that the derivatives that proved to be by far the most
serious, [were] those associated with credit default swaps [which]
increased 100 fold between 2000 and 2008. 84. If the laws and
Congress are indeed intended to protect the public and our
society
from potential harm, the irrational, illogical steps which took
place paved the way for the derivative market to grow
exponentially, thus increasing risk exponentially. But the
Conspirator-owned Congress passed Laws which allowed banks and
hedge funds to hold less capital in reserve against their exposure
to losses if they purchased derivatives. Additionally, to further
inflate the MBS market, the cost on these bets was low.
85.
According to a class action Federal RICO lawsuit filed in
October 2010 in
Kentucky (Foster v. Mortgage Electronic Registration Systems
Inc., 10-cv-611): The Double and Triple Dip and Derivative
Contracts: Many of the MBS/Trusts were covered by an insurance
policy, commonly referred to as a Derivative or Collateral
Contract. These Derivative Contracts are not recorded or regulated
by the SEC. Upon information and belief, the Defendants have
attempted to receive distribution, fees or proceeds or have
received distributions from the liquidation of the borrowers homes,
when the actual beneficiaries under the homeowners loans, the
shareholder/investors have been made whole by a Derivative
Contract. In other instances, the MBS has been closed months or
years prior. Funds collected from the loans allegedly within the
MBS, are no longer being paid to the investors, but are an unearned
windfall to the servicer. Additionally, there is no contract
between the investors and the foreclosing entity which would allow
them so act as a Plaintiff in a Foreclosure even when the MBS is
not shut down. Likewise, the MBS/Trusts themselves became parties
to Derivative Contracts. Most times, the actual Derivative contract
is for more, up to ten times (10x), the face value of the MBS. More
often than not, multiple insurance policies were taken and traded
on the MBS. The double dip or double compensation of the
MBS/Trustee, or Servicer is improper in its own right. The offense
is patently egregious when it is viewed in light of the fact that
the Servicer has no standing to foreclose, yet they came and
continue to come to the Courts with the fabricated and forged
documents. TOO BIG TO FAIL 86. To ensure the collapse of the
economy, the Conspirators had to make sure that the
banks and institutions were so critical to the financial
infrastructure of the American economy (and the world), that a
failure would have dramatic, far-reaching consequences, therefore
these institutions had to be too big to fail and thereby rescued by
the government. Hence, for the 10 years prior to the crash,
numerous mergers had taken place with larger banks gobbling up the
smaller banks thus rendering them as too big to fail. 87. In the
aftermath of the crash the Conspirator-owned largest banks have
consolidated the banks which intentionally failed so they could
create even larger institutions which would then be capable of
controlling the worlds monetary system. These Conspiratorowned
institutions bought the banks which failed for pennies on the
dollar. Washington Mutual had $307 Billion in assets, but was
acquired by Chase for a mere $1.9 Billion, with the officers
of the failing banks retaining their multi-Million bonuses and
golden parachutes in exchange for their Oscar-winning performances
where they acted as if they knew nothing. MERS: THE SECRETIVE VEIL
WHICH CONCEALS INSIDER FRAUD 88. To deceive the public and the
courts for as long as they possibly could, the
Conspirators devised a secretive veil to hide their crimes. That
smokescreen was the Mortgage Electronic Registration System, or
MERS, a privately held corporation created in 1998 by the
Conspirators. MERS was established to circumvent the lawful
requirement to record all documents pertaining to the beneficial
ownership of real estate at the county level. And the Conspirators
brazenly created this new entity without going through the
legislative process. 89. MERS undermines and eviscerates
long-standing principles of real property law, such as the
requirement that any person or entity who seeks to foreclose upon a
parcel of real property: 1) be in possession of the original note,
2) Have a publicly recorded mortgage in the name of the party for
whom the underlying debt is actually owed and who is the holder of
the original Promissory Note with legally binding assignments and
3) possess a written assignment giving he, she or it actual rights
to the payments due from the borrower pursuant to both the mortgage
and note. 90. Most important, MERS operates in the dark thus
allowing the Conspirators to
conceal numerous violations of the law which could later be used
as evidence of their scheme. Among those violations is having the
ability to repeatedly sell and assign borrowers promissory notes
this making even more money the Conspirators used the cover of mers
to make it possible to sell these mortgage notes to multiple MBS
pools to make even more money! 91. MERS does not share their
registry with anyone and therefore, it has created a
shadow or false registry. Because MERS and the Conspirator-owned
banks refuse to share the chain of title with any entity, they have
the ability to create any document they want. BRIBING THE RATINGS
AGENCIES 92. Large institutional investors have restrictions placed
upon them and can only
invest in AAA-rated low risk investments, so according to the
Oscar-winning documentary
Inside Job, and Michael Lewis The Big Short, the Conspirators
simply paid the Ratings agencies, Moodys, Fitch and Standard and
Poors, millions of dollars in bribes. The Conspirators singled out
the best and brightest employees of the ratings agencies and if
these people produced favorable ratings for the MBSs, they were
offered extremely well-paying jobs. Thus, there was a built-in bias
to rate the MBS pools favorably despite contrary data emanating
from multiple sources which indicated that sub-prime MBSs were
indeed an extremely high-risk investment and contained mortgages
which were so bad that they were guaranteed to fail. 93. The
majority of MBS were rated AAA by Moodys or Standard & Poors
in
order to invoke a sense of confidence to the investors. The
rating agencies, currently under investigation by the Justice
Department for their role in the financial meltdown, were
controlled by the Conspirators. The Underwriter/salesman of the
Conspirator-owned banks hired and compensated the ratings agencies.
GETTING RID OF TROUBLESOME REGULATORS 94. To ensure that
potentially problematic regulators would not have the ability
to
uncover the Conspirators scheme, according to the Oscar-winning
documentary Inside Job, the Conspirator-controlled Congress quickly
passed legislation to cut the Enforcement Division of the SEC from
146 regulators to 1 lone regulator who remained on staff. 95. The
Conspiracy and its Conspirators extended to other countries
including Prime
Minister Tony Blair of Great Britain. Economist Charles Kadlec
wrote in The Daily Reckoning: As former Prime Minister Tony Blair
writes in his memoir, A Journey of My Political Life, an important
contributor to the financial crisis was a failure of understanding.
We didnt spot it...it wasnt that we were powerless to prevent it
even if we had seen it coming; it wasnt a failure of regulation in
the sense that we lacked the power to intervene. Had regulators
said to the leaders that a huge crisis was a