FACTUAL CONSTIPATION: THE URGE TO NOT DISCLOSE

EDITOR’S NOTE:   FACTUAL CONSTIPATION is our current state of reality. It is the universal strategy across the board from Wall Street, the pretender lenders, servicers, and all other intermediaries in the gross illusion known as “securitization” of debt. We can’t get the information in court from Judges who can’t or won’t allow the inquiry, we can’t get the information using federal statutes (TILA, RESPA, UDCPA) that were specifically written with teeth to allow us to find out the identity of the creditor and to get a full accounting of all debits and credits related to our obligation, and we can’t examine the skeletons in the closets of Wall Street investment banking firms, the rating agencies, the counterparties in credit enhancements, or the insurers.

We are left with naked “assurances” from the same sources that created awesome illusions of wealth in the minds of the people they were robbing. No proof required. And if the “creditors” found a way to get paid AND take the house, that’s OK too. And if the actual creditors did not get paid, but their agents collected insurance and other proceeds amounting to multiples of what the investors actually received — that is a matter for the creditors to work out. Obligation extinguished? No problem, enforce it anyway!! Receivables from obligation assigned to multiple sources of cash WITHOUT the mortgage? No problem, foreclose anyway in the name of some party who never had a dime in the deal.

You say you’re a trust but you have no trust documents or any evidence of your existence? No problem! You say the loan was securitized into a pool where the documents show co-obligors added to the obligation. No Problem! Forget those insurance policies whose premiums were paid from proceeds of the investor lending money to the borrower. Why should that count for anything? So what if it is in the note that the borrower signed! So what if it isn’t in the bond that the investor received! So what if all the documents you have were freshly printed  fabricated and forged the morning of the hearing in court? This is big business. The little guy doesn’t get to win, no matter what the law says and no matter what was done to him. And if that undermines our country’s strength and national security, so much the better for those who would take over lock, stock and barrel.

Just how close do we have to get to the legal nightmare of unmarketable title for most residential and commercial property in the United States before we start addressing reality? The Judicial branch of government, the last bastion of protection of the constitution and our whole body of laws has failed miserably in the basic requirements of law, procedure, fairness and equity. A handful of Judges have clearly stated that upon closer scrutiny of the documents submitted to support foreclosure, they don’t hold up to even basic elements of proof or evidence. Some State Supreme Courts have issued opinions on the same thing. Sanctions have been issued against major names like Wells Fargo and Bank of America for misrepresenting themselves as the creditor. Settlements for hundreds of millions of dollars are being paid to investors who advanced the funds for the loans to borrowers. Where is the allocation of that money to reduce the obligation? If they received the money, why is it still owed?

WHAT IS SO DIFFICULT ABOUT THIS? EITHER WE HAVE A CLEARLY DEFINED BORROWER, OBLIGATION, CREDITOR, AND BALANCE DUE OR WE DO NOT. IF NOT, THE BURDEN IS ON THE PARTY SEEKING FORECLOSURE TO CORRECT IT. IF YES, THE FORECLOSURE PROCEEDS. WE ALL KNOW THIS — WHY ARE WE NOT FOLLOWING LAW THAT IS ESTABLISHED FOR CENTURIES?

The fact remains that our government not only regulates these entities and has huge powers of subpoena and other investigation tools, but is now a significant shareholder, if not the major shareholder of most of these entities. The current plans to disengage the US government from ownership in these entities under the guise of giving back to the taxpayers their money, merely enlists the government as a co-conspirator in withholding essential information from both claimants and policy makers.

AIG and the rating agencies lie at the root of the mortgage bond and mortgage security ripoff that brought down the economy of the nation, the states, the cities, counties and even neighborhoods. And it was the fraud and nondisclosure at the top that enabled and encouraged the fraud and nondisclosure at the bottom––where unsuspecting borrowers who were totally ignorant of the complexities of Wall Street “innovations” signed documents that in most cases did not represent the deal that was offered to them, nor even a transaction that could ever have been completed. The misinformation leading to the ridiculous valuations of mortgage-backed securities was identical to and part of the plan of misinformation and ridiculous valuations of the underlying property values.

Unless and until the reality of the situation is fully disclosed and we are relieved of the mental and factual constipation that is being perpetuated by the courts and by government policy, we cannot effectuate a remedy to an economic nightmare that continues everyday. Our economy can be fixed, but not by  participating in a cover-up plan. Here is the truth: all the money is sitting on Wall Street, which continues to report high profits, Grant high bonuses, and incredibly comes up with hundreds of billions of dollars to “repay” the American taxpayers out of money stolen from those same taxpayers.

Here is the remedy: restore the American taxpayer and the American homeowner to the positions they were in before the fraud. This means a transfer of wealth back to those who have been reduced to poverty or simply untenable financial condition. It means reducing the clout of Wall Street from being 40% of our GDP back to 16% of our GDP where it belongs. The other 24% was mere illusion covering up the fact that we were in fact producing no goods or services of value.

This restoration is not a gift anymore than returning the purse to a woman from a thief that snatched it. Anything less, will leave us with a perpetual state of unemployment, under employment, lack of innovation and lack of prospects. Anything less will leave us falling further and further behind the other countries of the world and further behind the American dream. The question is whether we allow a twisted ideology and bad politics to award the thief with the purse or decide that we a nation of laws where we punish the thief and return the purse.

August 6, 2010
A.I.G. in Talks to Pay U.S. Debt, Chief Says
By MICHAEL J. de la MERCED

The American International Group has begun talks with the federal government over how to finish repaying its $130 billion taxpayer-financed bailout, its chief executive said on Friday.

Separately, he said, the company was making progress toward a potential sale of its consumer finance unit, one of several divisions it planned to shed as part of its turnaround.

“We’ll make sure taxpayers get paid back in full, and they will,” the executive, Robert H. Benmosche, said in an interview on Friday, as the company reported financial results that seemed to signal progress toward the repayment goal. “They’ll get paid back at a profit.”

The company reported a $2.7 billion loss for its second quarter, but the loss stemmed from a $3.3 billion charge related to the sale of a major international unit to MetLife. Excluding the charge, A.I.G. reported $1.3 billion in profit and $2.2 billion in operating income. Both figures showed improvement over the same time last year.

Mr. Benmosche, approaching his first anniversary as A.I.G.’s chief, has embarked on an aggressive campaign to sell off businesses, making the company much smaller than it was at the height of the financial crisis, when it faced possible collapse.

Along the way, Mr. Benmosche has clashed with some of the company’s overseers, including Harvey Golub, who stepped down as A.I.G.’s chairman last month. The company replaced Mr. Golub with Robert S. Miller, a turnaround expert with whom Mr. Benmosche said he worked well.

A.I.G. has begun holding talks with the Federal Reserve about ways to pay down its credit line, which had $20.5 billion outstanding as of June 30, plus an additional $6 billion in accrued interest and fees.

Already, the company is moving forward with the sale of two units: the American Life Insurance Company, an overseas insurance business, and Nan Shan, a Taiwanese life insurance company. It is also on track to sell American International Assurance, its Asia life insurance business, in an initial public stock offering.

A.I.G. is also accepting bids for its consumer lending unit, American General Financial Services, and hopes to announce a sale sometime this month, Mr. Benmosche said.

The stakes of the turnaround strategy are high: only after shedding its reputation as a ward of the state can A.I.G. again flourish as a company, Mr. Benmosche said. So long as questions remain about its dependence on government borrowings, the insurer could be hard-pressed to tap the stock and credit markets for fresh capital, he said.

Once the debt is paid off, Mr. Benmosche said, the company can hold serious negotiations with the Treasury Department about the government’s shedding of its nearly 80 percent stake in A.I.G. One option is to convert the government’s preferred shares into common stock that can be sold off over time, as is happening with Citigroup. Mr. Benmosche did not give a timeline for any possible sale.

“What’s important is that we have to get it right,” he said. “We have to make sure that we’re not leaving a lot on the table.”

Meanwhile, A.I.G. has made big strides in the businesses it is keeping, Mr. Benmosche said. Investment income in both its general and domestic life insurance operations is up, and while revenue from premiums written has fallen, that was in part because A.I.G. refused to cut its prices too far.

“A year ago, analysts were talking about a potentially enormous erosion of our business,” he said. “We have in fact been very successful in retaining business.”

Mr. Benmosche said that earlier this year, he visited 50 of A.I.G.’s biggest customers, and described the feedback as positive. So long as the company continued to make progress in paying back the government, customers indicated that they would most likely stay put, he said.

Another major A.I.G. business, the aircraft leasing company International Lease Finance Corporation, plans to raise up to $4 billion from the debt markets to help pay off a lifeline extended by the Fed. It also recently named a new management team led by Henri Courpron, a former Airbus executive.

The company is continuing to wind down A.I.G. Financial Products, the unit whose deteriorating credit-default swap business was at the center of the 2008 financial crisis. A.I.G. said on Friday that the unit had reduced the notional amount of its supersenior credit-default swap portfolio by 51 percent from Dec. 31, 2009 to June 30, to $89.5 billion.

Tags: AIG, Benmosche, MetLife, RESPA, TILA, UDCPA
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