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Saturday, April 27, 2013

While You Were Sleeping

I know we're all supposed to flex nuts over our mad constitutional law skills post-Boston, but let's take a shot that these issues might be a little bit more relevant to the daily lives of you, your neighbors, and your communities:
To recap: in the foreclosure deal, 13 banks agreed to pay a total of $9.3 billion to settle their liability in a number of areas, including robo-signing, which is just a euphemism for mass-perjury – robo-signing is the practice of having low-level bank employees sign documents attesting to full knowledge of case files in court foreclosure actions, when in fact they were signing hundreds of files per day, often having no idea whether the paperwork was correct or not.

It was done across the industry and turned housing cases across America into nightmares of jumbled and/or forged paperwork, in which even people who did not deserve to be thrown out of their homes were uprooted thanks to systematic errors by faceless bureaucrats who cut legal corners purely to save money.

All the major banks were guilty on a mass scale, but they worked with federal regulators like the Fed and the Office of the Comptroller of the Currency to secure this wide-ranging, industry-saving settlement, which not only covered the robosigning epidemic but a host of other bad or illegal practices, like the wrongful denial of modifications and the improper levying of (often hidden) fees.

Minus this crucial settlement, banks would have faced enormous uncertainty about their legal liability going forward, and getting a deal that not only gave these companies some legal closure but allowed them to pay pennies on the dollar for their illegal activity was a massive coup for the whole finance sector.

Only $3.6 billion was earmarked for cash payments to the nearly 4 million homeowners covered in the settlement. Most of the remainder of the deal was in other forms of non-cash relief, i.e. modifications or principal reductions.


Got all that? The banks admitted that they lied, perjured and forged legal documentation, and in some instances committed interstate mail fraud -- and not only does no one go to jail, but the people they defrauded get a pittance for their troubles. They bought off the "consultants" the so-called gubmint appointed to root this bullshit out, and got clean away with it. Gawrsh, you might almost think the fix was in:

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.
Here's the thing -- unless you are in the exclusive club, Joe Sucka Sixpack, you are getting rooked, and hard. It is not going to stop, it is going to accelerate. Why? Because nobody does a fucking thing about it.

There are two options at this point -- beating them or joining them. No one can be blamed for picking one way or the other, but as a wise man once pointed out, if you choose not to decide, you still have made a choice.

So what's it going to be? If you came home and found some scumbag horking your flat-screen out the door, you wouldn't put up with it, would you?* So these guys are stealing your future, and your kids' and grandkids' futures. Slightly bigger than a goddamned teevee. And they think this shit is funny. I promise you, they are laughing all the way to the bank over this, every stinking day. This is hilarious shit to them; it's like torturing an animal that hasn't got enough sense to just run away already.

So. What are you gonna do about it? Put up with another four years of collaboration weakly disguised as gutless incrementalism, because the other side says something stoopid about abortion, even though they've already gutted Planned Parenthood in their states to begin with? Vote like it actually makes a difference?

Good luck with it. The real crime is here, and now. The banksters are still at it, stealing and raping your futures. The world of debt peonage and wage slavery is not accidental; they literally (the only correct usage of that word you'll see this weekend, most likely) depend on your complicity.

*[I changed this line, because originally I had insinuated that catching someone robbing your house might incite you to kill them. While obviously [to me] a polemic line, I don't want to risk giving some weirdo out there the wrong idea. I don't want to grievously harm the banksters (though I would like to personally pimp-slap them, like the thieving snake bitches they are). I think the best way to deal with these animals is to make them poor, to divest from their system.]

2 comments:

Sean Riley said...

Heywood, this is another one of your posts that manages to anger, inspire, frustrate and galvanize me all at the same time. Curse and praise you, goodly Sir!

Heywood J. said...

Ha, I like the duality of that, cursing and praising at the same time.

I dunno what it's going to take to motivate people; it seems like the banksters just won't be happy until they've finished wrecking the financial system, and then making the rest of us pay for that as well.

Cyprus was just a test case. They won't just be burning the Russian mob when they do it here.