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The Fed Bought Fraud

Posted: Oct 29 2010     By: Greg Hunter      Post Edited: October 29, 2010 at 9:39 am
Filed under: Greg Hunter, USAWatchdog.com
Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,
In the wake of the financial meltdown of 2008, the Federal Reserve announced it would buy mortgage-backed securities, or MBS.  The January announcement by the Fed said it would buy MBS from failed mortgage giants Fannie Mae and Freddie Mac in the amount of $1.25 trillion.  At the time, the Fed said in a press release, “The goal of the program was to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally.”  (Click here for the full Fed statement.) It did provide “support” to the mortgage market, but did it also buy fraud and cover the banks that sold it?  The evidence shows, at the very least, it bought massive amounts of fraud.
We now know the Fed definitely bought valueless MBS because it has joined other ripped-off investors to demand Bank of America buy back billions in sour home debt.  A Bloomberg story from just last week, featuring Philadelphia Fed President Charles Plosser,  reports, “The New York Fed, which acquired mortgage debt in the 2008 rescues of Bear Stearns Cos. and American International Group Inc., has joined a bondholder group that aims to force Bank of America Corp.to buy back some bad home loans packaged into $47 billion of securities.  On the one hand, the Fed has “a duty to the taxpayer to try to collect on behalf of the taxpayer on these mortgages,” Plosser said today at an event in Philadelphia.”
Mr. Plosser lamented the “difficult spot” the central bank is in because it is both bank regulator and plaintiff.  He said, “Should we be in the business of suing the financial institutions that we are in fact responsible for supervising?” (Click here to read the complete Bloomberg story.) To that question, I ask shouldn’t the Fed have done a much better job of supervising the big banks in the first place?  The whole financial and mortgage crisis from sour securities to foreclosure fraud is in the process of blowing sky high.  The entire mess is clearly the biggest financial fraud in history!  It looks to me like the regulators were just supervising their pay checks being deposited into the bank.
And remember, the $1.25 trillion of mortgage-backed securities the Fed bought from Fannie and Freddie?  How much of that is fraud?  William Black, the outspoken Professor of Economics from the University of Missouri KC, says all the big banks were committing “major frauds”in the mortgage-backed security market.  Black says, at Citicorp, for example, “. . . 80% of the mortgage loans it sold to Fannie and Freddie were sold under false representations and warranties.” (Click here for the complete Black interview.) Black claims the frauds increased at some banks, and it is sill going on today!   (I admit I used this same video in a recent post.  I use it again, because it is the single most important and damning indictment of the big banks out there.  Professor Black defines the size of the entire fraudulent mortgage mess.)
More…

In The News Today

Posted: Oct 29 2010     By: Jim Sinclair      Post Edited: October 29, 2010 at 11:43 am
Filed under: In The News

Thought For The Morning
1.4% of the GDP growth of 2% was inventories.
That is scary.

Jim’s Mailbox

Posted: Oct 29 2010     By: Jim Sinclair      Post Edited: October 29, 2010 at 2:00 pm
Filed under: Jim's Mailbox
Jim,
It really doesn’t take much to get to 1650. It’s just a matter of time.
CIGA Stefaan



Economy grows at slightly faster pace in Q3 CIGA Eric
The operative phrase is spent a little more freely.
Private and government (Federal, State & Local) consumption account for 70% and 20% of GDP, respectively. This means that 90% of US GDP comes from a combination of private and public consumption. While some will argue that government consumption expenditures and gross investment also contains "investment", it is nowhere near as efficient and productive as private sector investment. Private sector investment has fallen to 13% as of the third quarter 2010. This is well below the 50’s, 70’s and 80’s highs that exceeded 20%.
Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947:
Government Consumption Expenditures and Gross Investment (GCEI) As A %GDP Average from 1947:
Gross Domestic Private Investment (GDPI) As A %GDP and Gross Domestic Private Investment (GDPI) As A %GDP Average from 1947:
The economy grew at a slightly faster pace over the summer as Americans spent a little more freely.
The Commerce Department said Friday that the economy expanded at a 2 percent annual rate in the July-September quarter. It marked an improvement from the feeble 1.7 percent growth in the April-June quarter.
Source: finance.yahoo.com
More…

Hourly Action In Gold and Silver From Trader Dan

Posted: Oct 29 2010     By: Dan Norcini      Post Edited: October 29, 2010 at 1:58 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Click chart to enlarge today’s hourly action in Gold and Silver in PDF format with commentary from Trader Dan Norcini