Scoff if you like but bitcoin, despite its myriad defects and detractors, is getting an increasing level of focus in high finance.» Read More
Ezra Klein has a great interview with Janet Tavakoli, the founder of Tavakoli Structured Finance, on Foreclosure Gate.
Ezra Klein: What’s happening here? Why are we suddenly faced with a crisis that wasn’t apparent two weeks ago?
Janet Tavakoli: This is the biggest fraud in the history of the capital markets. And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago. Loans have representations and warranties that have to be met. In the past, you had a certain period of time, 60 to 90 days, where you sort through these loans and, if they’re bad, you kick them back. If the documentation wasn’t correct, you’d kick it back. If you found the incomes of the buyers had been overstated, or the houses had been appraised at twice their worth, you’d kick it back. But that didn’t happen here. And it turned out there were loan files that were missing required documentation. Part of putting the deal together is that the securitization professional, and in this case that’s banks like Goldman Sachs and JP Morgan, has to watch for this stuff. It’s called perfecting the security, and it’s not optional.
Barack Obama’s quick decision Thursday not to sign the Interstate Notarization Act was announced after CNBC and others raised an alarm that the bill might be a covert "bailout" of the foreclosure documentation scandal that has ensnared many large mortgage lenders.
The foreclosure scandal is easy to explain. In many states, banks can avoid an evidentiary trial in a foreclosure proceeding by having bank officers sign a notarized affidavit affirming the particulars of the home loan and the borrower’s delinquency. As part of the affidavit, the loan officer must attest to personal knowledge and review of the loan documentation.
It turns out that, at least in some cases, the loan officers were merely signing the statements without reviewing the documentation—thus falsifying the affidavits and fraudulently obtaining foreclosure orders.
What on earth happened during the last forty-eight hours on the so-called “mortgage foreclosure” bill?
Earlier in the week, it seemed no one outside of wonky Washington policy circles had heard of — or cared about — the bill . And then it became a political hot potato that led the Wall Street Journal’s website , and caused the liberal blogosphere to become little short of apoplectic. By midday yesterday, John Carney’s report on the story included an excerpt from a blog post on the White House website explaining that the president would not be signing the bill into law.
So what happened here?
With the current well-known climate of political hostility in Washington — it seems every other story about the legislative agenda mentions “partisanship” and “polarization” or even “divisiveness” — how did a bipartisan bill pass with such little notice?
Bank of America announced today that they too will halt foreclosure proceedings, as information came to light about the use of so-called robo-signers in the processing of mortgage documentation. BofA’s move comes among increased political pressure by lawmakers to suspend foreclosure proceedings.
When was the last time you got anything for free?
This morning, TD Ameritrade joined Charles Schwab, Fidelity and Vanguard in offering commission-free trades on some ETFs. Of course, there are restrictions and the restrictions vary by company. But being the skeptic, you have to ask, why are discount brokers offering commission free trades for what is the hottest product in equities? What's in it for them? Could this have anything to do with issues surrounding high frequency trading? Pay for volume? Or good old fashioned arbitrage.
Nicole Lapin, of CNBC's Worldwide Exchange, explains what she's long and what she's short this week.
The currency wars are heating up.
Competitive currency devaluation is driving commodities like the price of gold to dizzying new highs. In one corner, you have the "gang green" greenback which made a 15-year low against the yen of 82.11 Thursday and in the other corner you have the yuan, which the Chinese perpetually promise to allow to appreciate but somehow never really get around to it. European Central Bank President Jean-Claude Trichet says economic fundamentals should be reflected in currency levels.
But reality is not a part of this currency game. Treasury Secretary Timothy Geithner was dead on when he said a "dangerous dynamic" is being created with countries that are all trying to keep their currencies values down.
We've heard lots of tough talk about the Yuan in the last week and you can bet you'll hear more of it during the International Monetary Fund meeting this weekend. But you have to wonder if there is any bite behind the bark.
Last week in the House Ways and Means Committee, the Currency Reform for Fair Trade Act \(also known as the China Currency Bill\) was passed. The legislation empowers the Commerce Department to impose tariffs on China if its yuan doesn't accelerate in value. I spoke with Ways and Means Chairman Sander Levin \(D-Mich\) on his expectations coming out of the IMF meeting and if we'll hear more rhetoric rather than action.
When the International Monetary Fund lowered its forecast for U.S. growth this year and 2011, it pointed to “sluggish personal consumption” as the main drag on the economy. Since consumer spending accounts for 70 percent of the U.S. economy, the question of why spending remains so low is central to any inquiry into the future of our economy.
How Houses Became ATMS
The usual reasons given for the slump in consumer spending don’t go far enough. Sure household wealth deteriorated thanks to housing prices. Tight credit has made it harder to get credit cards or buy big ticket items. High unemploymentmeans many Americans just lack income to spend. Fear of unemployment drives even employed Americans to put a little more away for the proverbial rainy day.
But there is a deeper reason Americans aren’t spending as much. Typically it goes under the rubric of a “desire to save more”—although that is more of a description than an explanation. If Americans suddenly desire to save more, it’s worth trying to find out why.
Next FOMC meeting a “tough call” says Fed’s Bullard. Double dip risk down; (CNBC.com)Fed may wait and see on QE. Still, economy has slowed.
John Carney is a senior editor for CNBC.com, covering Wall Street and finance and running the NetNet blog.
Jeff Cox is finance editor for CNBC.com.
Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.
Stephanie Landsman is one of the producers of CNBC's 5pm ET show "Fast Money."