Donald Trump’s Finance Chair Is the Anti-Populist From Hell

Steve Mnuchin specialized in fraudulent foreclosures during the heart of the Great Recession. Power to the people.

New Republic |  May 9, 2016     Donald Trump’s first major staff selection since securing the Republican nomination, national finance chairman Steven Mnuchin, co-founded and manages the hedge fund Dune Capital. Not only did he make partner at Goldman Sachs, so did his father in the 1960s. With over 30 years of experience at the top levels of finance, Mnuchin was present for every recent major banking innovation, including those that brought the country to the brink of economic collapse.

Critics have raised many questions about Mnuchin’s financial dealings, from a lawsuit over pocketing profits in the Bernie Madoff case to his suspiciously quiet exit from the Hollywood production company Relativity Media just before it took huge losses and filed for bankruptcy. Just his association with “vampire squid” Goldman Sachs has motivated some anger. But another part of Mnuchin’s history is more relevant: his chairmanship of OneWest Bank, a major cog in America’s relentless foreclosure machine.

Even among the many bad actors in the national foreclosure crisis, OneWest stood out. It routinely jumped to foreclosure rather than pursue options to keep borrowers in their homes; used fabricated and “robo-signed” documents to secure the evictions; and had a particular talent for dispossessing the homes of senior citizens and people of color.  Read more here.

Attorneys at Jeffrey Jackson & Associates, LLP are against Donald Trump and his Wall Street insiders.

America's Foreclosure Crisis Isn't Over

CBS News |  January 26, 2016    With Goldman Sachs (GS) recently agreeing to pay $5.1 billion to settle claims related to its role in the 2008 mortgage scandal, the firm became the latest big Wall Street bank to reach a deal with the U.S. government. As part of the settlement, $1.8 billion is to be set aside for programs to help homeowners who are still trying to fend off foreclosure?

Yet nearly seven years since the Great Recession ended, the question remains: How well have these anti-foreclosure programs worked? It depends on whom you ask and where they live.

Back-stopping the nation's banking system was the top federal priority during the height of the 2008 financial crisis. But out of the $475 billion that Congress authorized for the Troubled Asset Relief Program (TARP), $46 billion was supposed to help millions of struggling families avoid foreclosure.

A subsequent 2014 settlement between prosecutors and Bank of America (BAC) netted an additional $16.6 billion, of which then-Attorney General Eric Holder said $7 billion would go to "provide relief to struggling homeowners, borrowers and communities affected by the bank's conduct."

All told, between the programs administered through the Treasury Department -- like the Home Affordable Modification Program (HAMP) -- and the pools of money committed by Wall Street banks as part of their settlements, tens of billions of dollars have been set aside to assist families facing foreclosure by modifying their mortgage terms so they can remain in their homes.  Read more here

Voices: For Some, Foreclosure Means Free Housing

USA Today - Opinion | January 4, 2016    LAS VEGAS -- I used to think of foreclosure as chillingly final. Then I visited this city, where the slow unspooling of the great housing crash of 2007-2009 is affording free shelter to tens of thousands of people.  Most are living in homes they technically still own, but on which they haven’t made a mortgage payment in months or years; others are squatting illegally in homes that were abandoned by owners who defaulted on mortgages.  These homes are in real estate limbo — in foreclosure, but not actually foreclosed — because many lenders are taking their time completing the process that eventually leads to repossession and resale.  Read more here

We've Learned Nothing From the Subprime Mortgage Meltdown. Here's Proof.

Los Angeles Times  |  Opinion  |  December 15, 2015     "The Big Short," which I saw over the weekend, is an entertaining movie. It's also deeply disturbing because one take-away is that we learned nothing from the stupidity and greed of the subprime mortgage meltdown.

Want proof? Look no further than a recent crackdown in the subprime sector by the Consumer Financial Protection Bureau.

The watchdog agency, which conservatives say is the embodiment of regulatory overreach, slapped Florida's Clarity Services Inc. and its owner, Tim Ranney, with an $8-million fine for illegally accessing the credit files of thousands of consumers nationwide.  Read more here.

MERS' Role in Foreclosures

Mortgage Electronic Registration Systems, Inc. (MERS) is a Delaware Company based in Reston, Virginia.  MERS is named on nearly all mortgages and deeds of trust in the USA as the “beneficiary” of the mortgage “solely as nominee for lender and lender’s successors and assigns.”  As is the case in these days of securitization, the original lender named in a mortgage or deed of trust is not usually the party that attempts to foreclose on the loan.  That means the original lender sold the loan into the secondary market, either to be securitized by Wall Street or otherwise. 

Since the 2008 housing crisis, many Texas state courts and Texas federal courts have upheld the proposition that a homeowner may challenge the standing of a bank that claims the right to conduct foreclosure.  These cases hold that a party that is not the original lender has to show an unbroken chain of assignments and/or transfers from the original lender to itself of either the mortgage note or deed of trust in order to foreclose. 

However, the banks have used MERS’ status as “beneficiary” of the security instrument “solely as nominee for lender and lender’s successors and assigns” to try to avoid showing what parties actually are in the chain ofassignments and/or transfers of the loan documents.  The banks will simply file an assignment in the real property records from MERS to the party that is foreclosing and argue that such an assignment demonstrates a complete chain of assignments from the original lender to the party that is foreclosing.  However, on nearly every MERS assignment, MERS does not state for whom they are acting as “nominee” in making the assignment; rather they simply recite that MERS is acting “solely as nominee for lender and lender’s successors and assigns.”  The question thus becomes, for whom is MERS making the assignment for as a “nominee”?

It is common knowledge that MERS does not actually hold or own mortgages or mortgage notes in its own name.  This is the conclusion reached by a federal judge in the Southern District of Texas in the case of Nueces County v. MERSCORP Holdings, Inc., No. 2:12-CV-00131 (Docket #70), 2013 U.S. Dist. LEXIS 93424 (S.D. Tex. July 3, 2013) (“MERS is not a lender, and it does not have the rights of a lender, note holder, or note owner to enforce a promissory note and seek a judgment against a debtor for the repayment of loans.  MERS is merely an agent or nominee of its members, who are banks, lenders, and other financial institutions that hold and trade promissory notes secured by deeds of trust naming them as the lenders and MERS as the beneficiary.”  Id. at 12 (emphasis added).  “MERS has no right to enforce the promissory notes or seek judgments against borrowers in default. MERS is simply the nominee of the beneficiaries of the security instruments with the right to foreclose on behalf of the secured parties under the deeds of trust. In sum . . . Texas law [does not] support Defendants’ argument that MERS may serve as a secured party or lienholder.”  Id. at 22 (emphasis added)).  You can read a copy of Nueces County v. MERSCORP Holdings, Inc. here.

Jackson & Elrod, LLP has several cases pending where this issue has been presented to the courts.  As of this writing, the firm has been able to convince one Texas federal court that MERS’ failure to identify for whom they are acting as “nominee” in a mortgage assignment creates a claim under the Texas Fair Debt Collection Practices Act for “misrepresenting the status or nature of a debt.”  Johnson v. Morrison Home Funding et. al., No. H-14-2549 (Docket #30) (S.D. Tex. August 6, 2015).  You can read a copy of the Johnson memorandum and order here.

Jackson & Elrod, LLP will continue to fight to protect Texas homeowners’ common law right to have the foreclosing bank reveal the true real-parties-in-interest along a chain of assignments and/or transfers of a loan.  If the banks are allowed to skirt this requirement, they will be incentivized to blow up more housing bubbles since the law will not require them to actually complete contemporaneous transfer documents when a loan is sold in the secondary market.  The ability to flash-trade mortgage loans leads to speculative bubbles and a lot of innocent victims in our society when the bubbles crash.

 

 

The Myth of the Need to Balance the Budget


We are constantly bombarded with the myth that the federal government needs to balance its budget in order the get the federal deficit in check and end out-of-control government spending.  This refrain has been a hallmark of the Republican Party for decades, and more recently espoused with lunatic fervor by the Tea Party. Many Democrats have likewise promoted the idea that balancing the federal budget and reducing the federal deficit through spending cuts is a political goal that would stimulate the U.S. economy.

The logical fallacy in the argument for a balanced budget is that it assumes federal government spending itself has no relationship to the available tax base. Spending cuts to balance the budget is a policy that results in a shrinking tax base, which in turn requires more spending cuts to balance the budget.  This creates a vicious cycle of austerity in the form of spending cuts that erode the tax base leading to more spending cuts.

In the modern age, federal government spending itself is the primary driver of real production. Therefore, increased government spending correlates to an increased tax base.  The tax base increases more and at a faster rate when government spending programs are specifically designed to stimulate economic activity.  A recent example is the Obama stimulus of 2009 and accompanying bailout of the auto industry, which served to maintain existing jobs and create new jobs in manufacturing and infrastructure.  Although money for programs like the Obama stimulus is borrowed, the net rise in the tax base should, if the monetary stimulus is managed correctly, more than pay for itself over time.  In this way, federal stimulus through debt is an appropriate way to increase real production and the over-all federal tax base allowing the debt to be repaid with surplus left over.

But there is an even better way to use debt to stimulate economic production.  The Obama stimulus was a “monetary” stimulus because the money for the stimulus was borrowed from the public primarily by floating US Government bonds, drawing “hot money” into the economy.  However, the most efficient use of debt as a tool for economic growth is a “credit” stimulus.  A credit stimulus to procuring capital goods primarily differs from a monetary stimulus by the cost to borrow. The money for a credit stimulus would be borrowed from a national bank (in our case the Federal Reserve) at interest rates considerably lower than those obtainable in the bond market.  Thus, stimulating production of tangible goods like machine parts, energy generators, infrastructure, etc. is “off-budget,” and a tool to raise economic productivity and the tax base with much lower borrowing costs than obtainable in a monetary stimulus model.  The Federal Reserve has failed to function in this way for many decades.

Presently, the Obama monetary stimulus dollars have long since been spent. Our elected leaders have done nothing since to use government debt properly, with any type of stimulus, to use government spending programs to grow our way out of the continuing depression.

The Democrats are bad enough, but if the Republicans have their way, not only will a credit stimulus be out the window, but monetary stimulus will too. Perhaps the last true attempt at obtaining interest free debt was Lincoln’s issuance of greenback notes. The solution today is to commander the federal reserve with an act of Congress and force it to issue low interest, long maturity debt instruments to the federal government, state governments and authorities, under well-managed credit stimulus with window for investment in productive growth. A focus on infrastructure and large capital expenditures on productive equipment like factories and machine tools is essential.  A program largely on the model of Henry Hopkin’s Works Progress Administration is a recent historical example and model.

No longer can the Federal Reserve serve only the private banks.  And we must never forget that the most evil policy of all would be a “balanced budget” at a time of recession and depression.  Implementing that policy should be prosecutable at Nuremberg.
 

The Myth of the Need to Balance the Budget

We are constantly bombarded with the myth that the federal government needs to balance its budget in order the get the federal deficit in check and end out-of-control government spending.  This refrain has been a hallmark of the Republican Party for decades, and more recently espoused with lunatic fervor by the Tea Party. Many Democrats have likewise promoted the idea that balancing the federal budget and reducing the federal deficit through spending cuts is a political goal that would stimulate the U.S. economy.

The logical fallacy in the argument for a balanced budget is that it assumes federal government spending itself has no relationship to the available tax base. Spending cuts to balance the budget is a policy that results in a shrinking tax base, which in turn requires more spending cuts to balance the budget.  This creates a vicious cycle of austerity in the form of spending cuts that erode the tax base leading to more spending cuts.

In the modern age, federal government spending itself is the primary driver of real production. Therefore, increased government spending correlates to an increased tax base.  The tax base increases more and at a faster rate when government spending programs are specifically designed to stimulate economic activity.  A recent example is the Obama stimulus of 2009 and accompanying bailout of the auto industry, which served to maintain existing jobs and create new jobs in manufacturing and infrastructure.  Although money for programs like the Obama stimulus is borrowed, the net rise in the tax base should, if the monetary stimulus is managed correctly, more than pay for itself over time.  In this way, federal stimulus through debt is an appropriate way to increase real production and the over-all federal tax base allowing the debt to be repaid with surplus left over.

But there is an even better way to use debt to stimulate economic production.  The Obama stimulus was a “monetary” stimulus because the money for the stimulus was borrowed from the public primarily by floating US Government bonds, drawing “hot money” into the economy.  However, the most efficient use of debt as a tool for economic growth is a “credit” stimulus.  A credit stimulus to procuring capital goods primarily differs from a monetary stimulus by the cost to borrow. The money for a credit stimulus would be borrowed from a national bank (in our case the Federal Reserve) at interest rates considerably lower than those obtainable in the bond market.  Thus, stimulating production of tangible goods like machine parts, energy generators, infrastructure, etc. is “off-budget,” and a tool to raise economic productivity and the tax base with much lower borrowing costs than obtainable in a monetary stimulus model.  The Federal Reserve has failed to function in this way for many decades.

Presently, the Obama monetary stimulus dollars have long since been spent. Our elected leaders have done nothing since to use government debt properly, with any type of stimulus, to use government spending programs to grow our way out of the continuing depression.

The Democrats are bad enough, but if the Republicans have their way, not only will a credit stimulus be out the window, but monetary stimulus will too. Perhaps the last true attempt at obtaining interest free debt was Lincoln’s issuance of greenback notes. The solution today is to commander the federal reserve with an act of Congress and force it to issue low interest, long maturity debt instruments to the federal government, state governments and authorities, under well-managed credit stimulus with window for investment in productive growth. A focus on infrastructure and large capital expenditures on productive equipment like factories and machine tools is essential.  A program largely on the model of Henry Hopkin’s Works Progress Administration is a recent historical example and model.

No longer can the Federal Reserve serve only the private banks.  And we must never forget that the most evil policy of all would be a “balanced budget” at a time of depression.  Implementing that policy is prosecutable at Nuremberg.

Jeffrey C. Jackson, Esq.

A Simple Fix for Foreign Exchange Market Manipulation

In the deregulated floating-rate foreign exchange market (forex) the Euro has been losing ground to the dollar and the financial press is taking notice.  In typical fashion, the media has pointed to obvious political and economic events taking place in Europe in the U.S. to explain the shift in the forex.  The press implies that actual economic fundamentals are shaping movements in the forex; but in a deregulated floating-rate forex market, speculation and not economic fundamentals rule the day.

In this Reuters article, it is reported that “some traders” are citing the victory by anti-austerity parties in Spain as a factor.  In ludicrous fashion, Reuters states that while “the U.S. economy's recovery has not been as robust as many expected . . .  [n]evertheless, bits and pieces of upbeat data released this month have shown that the economy still stands above those of other developed economies such as the euro zone and Japan.”

By simply citing the most recent economic and political-economic events in the U.S. and Europe as the “cause” of the forex movement, Reuters (and the rest of the financial press) obscures the true factor driving the movement of the major currencies in the forex: financial speculation on a gargantuan scale. 

Financial speculation in world currencies has been the main driver of movement in the forex since 1973, when the Bretton Woods system came to an end heralding the start of the floating-rate market.  Under the Bretton Woods system, currency values where fixed to each other in a system that, while not perfect, kept values from fluctuating wildly.  Stability and economic fundamentals were the main drivers of currency movements under the Bretton Woods fixed-rate system.  When movement did occur, it was within a narrow band of 2-3%, preventing drastic and unanticipated loses for real producers in the forex market.

Today, only the illusion that economic fundamentals drive the forex market remains.  In reality, the rise and fall of the forex is driven by large private institutional market players – such as large banks and hedge funds – who use their incredible sums of money to take short or long positions on currencies.  Amazingly, buying and selling of currencies for immediate delivery is not considered an investment product, and therefore is not subject to the rules and regulations that govern most financial products.

Last week, Barclays, Royal Bank of Scotland, JP Morgan, UBS, Citigroup and Bank of America were all fined for blatant manipulation of the forex market, and the Telegraph is now reporting that Banks are bracing for hundreds of millions of pounds in new claims for foreign exchange manipulation from class-action lawsuits. 

Today, unfortunately for humanity, the idea of a fixed-exchange rate forex market fails to register as a solution to the problems of financial speculation and diminishing world productivity.  Today’s currency traders and their regulators cannot imagine anything other than a floating rate forex market – despite the fact the best historical example of rising per-capita world productivity occurred under the post-WW2 Bretton Woods system. 

The financial institutions and the governments that claim to regulate currency trading for the good of everyone cling to flimsy justifications for a floating rate forex.  The leading justification is the idea of the “free-market.”  The fiction of a “free market” forex is that economic fundamentals between countries drive slow, narrow, and anticipated fluctuations in the forex market.  The truth is that national and super-national agreements on fixed-exchange rates are absolutely indispensible in maintaining a forex market driven by actual economic fundamentals.  It is an absolute fiction that a deregulated floating rate forex market clears currency values on a daily basis based on actual economic events. 

Another fiction governments and institutions tout is the idea of a naturally occurring “business cycle.”  Many duped economists and journalists have sought to explain the movements in the forex markets since 1973 as a product of the business cycle.  In the minds of the duped economists and journalists, rapid and successive booms and busts in currencies are a byproduct of the human situation – which no government can do anything about. The historical reality that better systems (like Bretton Woods) have already existed and passed the test is ignored.

The most serious by-product of the speculation-led movements in the forex is the decline in per-capita world production and growth.  Actual producers of goods and capital products (like machine tools and factories) need mid-term and long-term calm and stability in the forex market in order to justify large capital outlays in productive capacity.  When the speculators are gaming the forex, actual productive world growth takes a back seat to financial windfall for the banker class.  The market is not rigged in favor of production and growth (like under Bretton Woods), but is rigged for the benefit of a tiny world elite of financial parasites. 

The idea of a fixed-rate forex market must make a comeback if we are to cure one of the major causes of world depression and the boom and bust cycles that have dominated the financial landscape since 1973.  The forex market must once again be rigged to ensure the future of human development as opposed to being rigged to ensure the continued domination of humanity by a perverted and sickened financial elite.

Jeffrey Jackson, Esq.

Wall Street Watchdog Can't Sue Over JP Morgan Deal

The Department of Justice (DOJ) has negotiated several “back room” deals related to the 2008 financial collapse with the titans of high finance over the last few years. Recently, the DOJ settled financial fraud claims related to the subprime housing bubble in a deal with the mega bank, J.P. Morgan Chase & Co., for $13 Billion.  J.P. Morgan Chase’s role in causing the worst financial collapse since 1929 was arguably greater than any other bank. The fact that our government is settling these claims in these secretive, closed door meetings with very large, politically powerful, and potentially criminal banks is repugnant to our free and democratic society.

Recently, Better Markets challenged the DOJ’s decision to negotiate this type of sweetheart deal with the megabanks. For those who don’t know, Better Markets is a Wall Street watchdog group dedicated to ensuring that we achieve real, substantive financial reforms and that large financial institutions don’t use their considerable political clout to evade justice filed suit against the DOJ. A Washington Federal District Court dismissed the case ruling that Better Markets and other similar groups lack the requisite standing to sue the U.S. Department of Justice for how it exercises its Federal law enforcement powers. Better Markets is evaluating the court’s opinion and exploring all of its options including appeal.

Sadly, this is another example of a “too big to fail” bank simply purchasing immunity from the Federal government for a pittance in a secret negotiation. This is NOT how American democracy works and it shows how powerful the titans of Wall Street truly are. While the courts have ruled groups like Better Markets lack standing to sue the government for cutting these banks slack, they cannot take away an individual’s right to seek justice for what the banks have done to them personally. This leaves those seeking justice one option, to challenge the wrongdoing perpetrated by the banking industry against them in a court of law. As long as the banks want to burn the little guy and buy their way out of trouble, Jackson & Elrod, LLP will be here to stand up for the rights of those deemed small enough to fail and file lawsuits on their behalf. What is done in the dark will be brought to the light.

Chad D. Elrod, Esq.