October 17, 2010

Foreclosure Counterattack: Propaganda, Pseudo-Legality, and Thuggery

Filed under: Land Reform, Law, Mainstream Media, Neo-feudalism — Tags: — Russ @ 1:32 am
(Also posted at Naked Capitalism.)
As Foreclosuregate, the legal crisis, looms ever larger and becomes a major political issue, the banks and government have scrambled to mount a counteroffensive against the consequences of their crimes. We can see how flat-footed they were caught. They seem to have become so comfortable with cutting every legal corner and evading every requirement which was even mildly inconvenient that they’re truly surprised this has escalated with such abruptness and violence. Their plan is to try to bluster and bully their way through by any means possible. They expect lies and lawlessness to prevail as always.
The first line of defense is the propaganda line that this is just a technical glitch, not a fundamental problem with the loan or the security, or any kind of systematic intentional fraud. So far this has been the preferred PR line for the administration and the mainstream media. But the banks are also working the line that no matter what the flaw, it can simply be legalized by legislative brute force.

Rather than deal with the considerable consequences of these abuses, the banks are prepared to bulldoze well settled state laws to give them an easy way out. And I’m not basing my view on this story alone; I had a conversation yesterday with a Congressional staffer who matter-of-factly said (but with little understanding of the underlying issues) that Congress would intervene on behalf of the industry, via its authority over national banks.

Congress took one step in this direction by frantically grabbing and unanimously passing a pre-existing bill which would require all states to accept the weakest state-authorized electronic notarizations. This would be only a minor fix of one of the technical issues, and isn’t very important in itself. But it probably foreshadows the far more expansive legislation we can expect to see after the election. Bolstering all of this, the banks are making extortionate threats against the real economy. They promise to wreck it even further if they aren’t given a clear path on this.
At the same time a concurrent propaganda line, seeming to somewhat contradict the other, is a hectic emphasis on speed.

Federal regulators sought Wednesday to prevent the growing furor over improper foreclosures from escalating, pressing mortgage lenders to replace flawed and fraudulent court documents while insisting that foreclosures continue apace.

It’s unclear why they’re simultaneously trying to downplay the significance of all this but also to drum up a sense of crisis which requires a stampede. You’d think they’d at least pretend to want to slow things down in order to make sure all those alleged “technical glitches” are properly fixed.
Demonstrating that the banks understand the significance of how the blogosphere has driven this story, the PR offensive has descended to the comment thread level, as we’re seeing the biggest surge yet of pro-bank commenters, many repeating the same talking points with suspicious discipline.
As Yves Smith at Naked Capitalism observed,

One regular reader has noticed that every time I put up a foreclosure post, the first comment, suspiciously close to the post time, is always a version of “deadbeat borrower”. He reads enough blogs that he is pretty convinced that NC is being targeted for this sort of message.

Perhaps the most insidious propaganda line, and certainly the most scabrous, is the bashing of alleged “deadbeats”. While the subprime borrower – powerless, often a minority – has long been an easy target, and the contempt has been spreading up the income scale as more people are engulfed in the catastrophe, the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price. More importantly, the main cause of inability to keep up the mortgage is losing one’s job or suffering a medical disaster. It’s the banks themselves who have presided over the destruction of America’s jobs, especially over the last two years. And it’s the government which refuses to counteract the banks’ campaign of socioeconomic scorched earth. (That’s the same government which also pointedly refused to reform the health care system, choosing instead to further entrench the existing larcenous dysfunction under a facade of lies and misdirection.)
So it’s the banks and government themselves who are overwhelmingly responsible for the wave of defaults. The defaults are the knock-on effects of the bank crimes, and now the banks want to seize the homes by further criminal means. Even after all this, few people fight foreclosures if they can’t afford to pay. The great majority of them say they can pay if they get a promised modification, or claim to be the victims of servicer error. So by any measure – moral, rational, or legal – the “deadbeat borrower” talking point is a sham.
But it’s no surprise, given the scurrilous character of the banks and their functionaries. A good indication of the kind of “legal” recourse they assume they can take are the kangaroo courts of Florida. These are not really courts of law but dedicated foreclosure machines manned by judges pulled out of retirement, apparently selected specifically for their bank-friendliness and/or ignorance of mortgage law and existing programs like the HAMP. These were given the mandate to process foreclosures as fast and lawlessly as possible. That puts the administration rhetoric about the need for speed in a new light. Evidently Florida’s rocket docket is the federal government’s dream solution as well.
But even this is failing to work for them. Political scrutiny and demands for legality are becoming more insistent, and the rocket docket has had to slow down and at least pretend to respect the law.
Underlying all of this, the foreclosures continue in spite of the vaunted moratoria. Perhaps they think they can still fool the judges this way: “We announced our moratorium, so obviously we’re only going ahead with fully legit foreclosures. Here’s the lost note affidavit on this one…” Now that this scam has been exposed, they’re spouting a reprise of the original lies – it’s a mistake, it’s miscommunication, we don’t know what’s happening with those bad apples….(Anyone who actually took anything they said seriously would have to wonder how it’s possible to be such a Master of the Universe, and warrant such a “bonus”, and yet make so many self-admitted mistakes and be so ignorant of everything all the time.)
This preference for lawlessness, this knee-jerk recourse to lies and crimes, is however no joke. At the lower levels, outside the regular media eye, the banks have repeatedly demonstrated their comfort with pure brutality. The examples proliferate of thugs threatening people, breaking and entering, bashing in doors, terrorizing occupants. So long as government at every level is the waterboy of the banks while people on the ground remain unorganized, atomized, and vulnerable, this will only get worse. We hear rhetoric, “joking” of course, about how they need to start burning houses down.

“The question to me is not do you foreclose or do you not foreclose. The question is when and with what philosophy you foreclose,” the man on the bank restructuring team said. “If you want to reduce the amount of leveraged homeowners you have, you need to ultimately kick them out of their homes.” A colleague walked up: His recommendation was to burn houses. It would lower the supply.

Even if that’s still a joke at the moment, how long can it remain so? It’s certainly in the mainstream of the logic.

Look, our hope is is that this moves rapidly and that this gets unwound very, very quickly and that if they can go back, reconstruct their paperwork and what we’ve stressed to them is that they need to expedite that process and work very, very quickly to get it done. we’re going to continue to push for that.

That’s Obama factotum Axelrod. And more from the firebugs:

“The first thing that needs to happen, I think, is to get these people out of their homes,” a man wearing a bespoke blue-striped shirt, a Hermés tie patterned with elephants and Ferragamo loafers said recently. “Correct! I’ll explain,” the veteran member of a bank restructuring and advisory team said.

Right there at Naked Capitalism we saw what may have been pro-bank handiwork, a shot across the bow, as it were. Yves was the target of a Denial of Service attack. Now that’s taking trolling to a whole new level. If it was done on behalf of the banks, it’s part of the logic.
All of this, from the original predatory lending, to flippancy about conveying the titles and legally securing the trusts, to the Bailout dedicated to propping up those toxic MBS, which we now know are probably nothing but unsecured loans, to the government-led propaganda campaign and legislative hankering to cover up and eventually “legalize” this latest revelation, down to the brutish violence and dirty tricks of the gutter, is one coherent whole, one simple train of logic. It’s simply the logic of might makes right, feudal greed, and total nihilism vis the law and democracy. The mortgage debacle reveals so many abdications of the system, and this abdication of the rule of law is one of the most thorough.


  1. I still contend that the DOS attack was o’man’s PPT “fat finger” on the BP redux. Otherwise, fully spot-on, as usual.

    Russ, I believe you’re just the being for our era’s common-sense manifesto.

    Comment by tawal — October 17, 2010 @ 4:13 am

    • Thanks, Tawal.

      Comment by Russ — October 17, 2010 @ 4:37 am

  2. Another prescient analysis is offered by Marshall Auerback:
    Foreclosure Fraud: We Need to Fix the Banks Again
    Friday, 10/15/2010 – 10:55 am by Marshall Auerback | 17 Comments

    Marshall speaks with authority as both a money manager consultant and an economics authority.

    Comment by William Wilson — October 17, 2010 @ 11:49 am

    • I commented on the Naked Capitalism thread for that post, so I’ll just reproduce the comment here:

      These are all fine ideas in themselves, if we actually had a lawful republic (which everyone implicitly admits we don’t).

      On the other hand, if it were possible to do any of these decent reforms, woudln’t it also be possible to just go all the way and solve the problem?

      For example – I like the idea of a banking holiday for the 19 biggest banks and all shadow banks. I agree it would affect mostly themselves and be far less damaging to the real economy than allowing them to stay open. (Which is the same argument we’ve been making since Septomber 2008.)

      So in that case – why make it a “short” holiday? Why not a permanent vacation? Shut them down and never let them reopen.

      The short holiday itself looks impossible under this system, and if things weaken to the point that it becomes possible, then it’ll also be possible with just a modest extra effort to go all the way.

      (That’s true not just regarding the banks but in every other area of policy as well.)

      Wall Street bankers turned homeownership into an “investment”, so owners ought to treat it like one — walk away from bad investments.

      I love the sentiment. Again, why be half-hearted about it? America’s bad investment here goes way beyond just some bad apples committing technical fraud. (The banks say it’s just affidavit sloppiness while reformers say fraud is a much greater problem. That’s true. But from a wider perspective than that, this legalistic fraud is a small part of the much greater problem of an entire system which is nothing whatsoever but organized crime, systemic legalized fraud and robbery – destructive and worthless.)

      Comment by Russ — October 17, 2010 @ 4:31 pm

  3. Russ, you made NC. Excellent! Is that the first time? Since meeting you, I have seen big things in your future. Keep hammering away.

    Comment by Johnny D. — October 17, 2010 @ 6:49 pm

    • Thanks JD. Yes, that’s my first NC cross-post. I sure will keep at it.

      Comment by Russ — October 18, 2010 @ 3:18 am

  4. I think the only thing that really matters is power. I believe the Golden Rule is incorrect, that those with the gold make the rules. It’s those with the power who make the rules. Russ, you are probably more intelligent than Nancy Pelosi, Harry Reid, Ben Bernanke, T. Geithner & B. Obama combined. But without power your impact on the system is minimal.

    You & I & everyone out here needs to be working on how to get some power.

    Comment by chas — October 18, 2010 @ 1:35 am

    • Thanks, chas. I think the main path to power isn’t to wrangle with those criminals within their system and according to the rules of their system (although in some areas, like food policy and net neutrality, it’s necessary). That’s just the way they’ve sought to organize social power.

      But this power is vast way beyond what they’ve been able to organize. Most of it still lies right before us, abandoned, waiting for us to pick it up and use it once again, to rebuild our communities and new economic and political structures from the ground up.

      I just said new structures, but it’s really redeeming structures which are older, of infinitely greater heritage than any modern kleptocracy which leeches off oil.

      As for this kleptocracy, I think the way to wrest power from it is predominantly to do the following as much as possible:

      Renounce it; purge all its rent extractions from our lives; create alternate, relocalized paths and live by them; where it tries to use force, evade or resist it according to what’s necessary in context.

      That’s the main path, while entering their arena to fight on their terms should be secondary. It has to be done in a few realms – food, Internet policy, civil liberties, and just to try to apply amelioratory pressure in general (but always targeting one of those areas). But that’s still the derivative, negative side of things.

      Relocalization is the affirmative path.

      Comment by Russ — October 18, 2010 @ 3:31 am

  5. It was quite a treat to see this cross-posted on NC. Great article! I really admire the way you cut directly to the issue’s moral center. To briefly comment on the writing style, I thought the paragraphs beginning “So it’s the banks and government themselves” were particularly strong. Your opening paragraphs were slightly less clear (sentence structure?) but given the huge number of comments at NC you obviously made a big impact. Congrats! And such a relevant topic. Bank defenders pound the deadbeat drumbeat with nauseating frequency. I suppose it’s their only defense aside from “Ha, ha, you stupid idiots fell for our scheme!” — which a libertarian would accept as perfectly valid, by the way.

    No matter how cynical I become about politics and finance I find myself continually underestimating the moral turpitude of our so-called leaders. The foreclosure crisis should have been a perfectly obvious outcome. For a decade the mortgage lending industry was devoted to chaining American families to a lifetime of unpayable debt. They churned through as many loans as possible with no standards whatsoever. Whenever some scant documentation was required they faked it. It’s perfectly in keeping that this brazen crew of confirmed fraud artists would resort to the exact same level of scumwork and depravity when it came time to turn people from their homes. It’s just another step of the Great Hollowing Out. And the swiftness is breathtaking. They destroyed the unions, pensions, quality health care, and then they went for the last thing the middle class had left — their homes. They’ll mindlessly search and destroy the remaining bastion of unions, the public sector, and put Social Security on the chopping block. The question is, what is left for them to take? Where is the next target?

    Medicare? The insurance companies don’t want to insure old people, but they’d love to make money denying procedures while government picks up the tab.

    Food stamps? One of the under-appreciated little stories of the current depression is how the Obama administration has silently encouraged the expansion of SNAP eligibility. But people have no right to food, just like they have no right to health insurance or housing. Surely there is some way for corporations to profit from the starving. On the state level, unemployment benefits are now subject to the corporate tax of mandatory bank-issued debit cards, complete with ludicrous and disgusting use fees.

    Worker protections? America must compete with China and Vietnam, after all. If a Chinese worker shows up 7 days a week for $350 a month, surely American workers must be allowed to “choose” to do the same.

    Local government? All local services and utilities to be privatised. In its place, an inescapable network of rents and fees with no appeal and no recourse (customer service isn’t a profit center).

    Social Security disability payments – This just has to go. The government can’t “afford” anything but bank bailouts and perpetual war. The only tax cuts it can afford are the ones for the rich.

    What else is on their list? What other things are ripe for the picking that we currently consider to be the bare minimum of civilized life?

    Comment by reslez — October 18, 2010 @ 6:52 am

    • Everything’s on the privatize-and-set-up-a-tollbooth block for “leaders” of such turpitude.

      (I just wrote another post on how “Obamacare” is trying to do that.)

      Thanks for the kind words and criticism. I’m always trying to improve the sentence structure and streamline the expression. As with everything else it’s practice, practice, practice.

      Comment by Russ — October 18, 2010 @ 7:01 am

  6. I think today’s announcement from B of A wherein they asserted that they have reviewed over 100,000 foreclosures and, as a result, decided to restart the process of booting people out of their homes forthwith may have hit a new low in perfidy.

    B of A couldn’t any more adequately make the sort of determination they would like us to think they’ve made, for at least three very good reasons, have than you or I could manage to scarf down a 16 oz Porterhouse in three minutes.

    I hear the knock of destiny, and it says that these mendacious, scurvy *&#^!ers, and their kith and kin, are going to be annihilated.

    Comment by Edwardo — October 18, 2010 @ 11:16 pm

  7. Let me try again:

    B of A couldn’t any more adequately make the sort of determination they would like us to think they’ve made (for at least three very good reasons)than you or I could manage to scarf down a 16 oz Porterhouse in three minutes.

    Comment by Edwardo — October 18, 2010 @ 11:18 pm

    • A few days ago there was a piece at NC which discussed how Wells, which has not announced a moratorium, also used robo-signers.

      I said, “if Wells continues to go ahead with foreclosures even after having been outed for the same practices, won’t the others have to lift their suspensions and follow?”

      So today I wonder if that’s what’s happened here, or if it’s just a coincidence. (Of course I always expected BofA and the others to lift the suspensions as quickly as they thought they could get away with it, so maybe it’s a coincidence.)

      Comment by Russ — October 19, 2010 @ 3:55 am

  8. “In politics there are no coincidences, FDR observed. No I realize that the banking industry isn’t politics, but the temporal correlation simply doesn’t lend itself to this being a coinkydink.

    Comment by Edwardo — October 19, 2010 @ 11:35 am

    • I wouldn’t think so.

      Comment by Russ — October 19, 2010 @ 3:26 pm

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