Republicans Leap to the Aid of Banker-Servicers Over AG Settlement Proposal

Now this is really getting to be down right hysterical… or is surreal is a better word… no, maybe hysterical and surreal… along the lines of “Dr. Bailout… How I Learned to Stop Borrowing and Love the TARP.”

The top Republican on the Senate Banking, Senator Richard Shelby came out swinging, referring to the 27-page Term Sheet proposal that was given to the banks by the 50 State Attorneys General, a “regulatory shakedown.”

It seems he was referring, in large part anyway, to the $20 billion in damages proposed by the Consumer Financial Protection Bureau, which he inexplicably claimed was now $30 billion.  Here’s what Shelby said, as quoted by American Banker magazine:

“Under the guise of helping homeowners hurt by improper foreclosures, regulators are attempting to extract a staggering payment of nearly $30 billion for unspecified conduct.”

The use of the word “guise,” I have to admit, I would probably have to agree with, as it is really just a “show”.  Twenty billion dollars thrown at the foreclosure crisis is about like trying to stop a charging bull rhino by throwing ping-pong balls at him.

But, if it’s the lack of specificity in the description of servicer conduct that’s got his goat, well then I’d like to volunteer to provide as many specifics as his little heart desires.  I’d even be willing to break it down into sub-categories for him, such as LIES, FRAUDS, NON-VIOLENT CRIMES, ACTS OF VIOLENSE, TERRORIST ACTS, BURGULARY, EXTORTION, CHILD ABUSE, ELDER ABUSE, GRAND THEFT, PETTY LARCENY, UNFAIR BUSINESS PRACTICES… heck, if I could get a little help from a lawyer or two, I’m sure we could submit something pretty darn specific to the senator no later than end of business tomorrow, and even sooner if he’d prefer.

Senator Shelby went on, according to the American Banker story:

“Setting aside for a moment the attempt to end run Congress, I question whether removing $30 billion in capital through a back-door bank tax is the best way to jump-start lending. The long-term consequences of this settlement could be even more serious. It would politicize our financial system.”

First of all… a “back-door bank tax,” Senator?  I don’t think you’re grasping what this whole thing is about, sir.  First of all, there’s nothing “back-door” about it… it’s coming right through the front door, actually.  And it’s not a tax, it’s a fine… a sanction… a penalty… punishment… restitution, even… albeit a paltry sum in light of the egregious nature of the crimes that have been committed by servicers, Senator… haven’t you been paying attention to what’s been going on for the last three years.  Are you unaware of the role the servicers have played in ensuring our nation’s ongoing economic instability?

And “politicize our financial system?”  That’s a good one, Senator.  Yeah, we wouldn’t want to politicize our financial system… you know, I hadn’t ever heard you tell a joke before… you’re actually a funny guy, Senator.  Senator Al Franken’s got nothing on you, sir.

But, unquestionably, the best part of Senator’s Shelby’s largely unintelligible rant, was when he threw down the “don’t fine them or there’ll be no lending” card.  He draws that card like a gun, doesn’t he?  He even sounds just like a banker when he does it.

I’m sorry, Senator, but at this point, that threat should leave the vast majority of Americans in absolute stiches.  I mean, are you familiar with the story titled: “The Boy Who Cried Wolf?”

Jump-starting lending?  Is that what we were in the midst of doing in your mind Senator, because I’m not sure you’re using the right terminology there… you can’t really mean “jump-start,” right?  Because to “jump-start,” something actually implies not only that something is being started, but further, that it’s being started in a hurry, and that wouldn’t apply to lending by the private sector, now would it, Senator?  See… because there’s precious little of that going on, sir… but I don’t need to tell you that… you’re on the Senate Banking Committee, silly.

This argument about lending goes all the way back to the TARP debate where we funded $700 billion… to make sure that lending started up again… and since then… WITHOUT APPROVAL FROM CONGRESS, OR EVEN ANY MENTION BY CONGRESS… we’ve DUMPED some 13 TRILLION into the banks, all tin an effort to start lending again… and still… there is no lending… the federal government is today the only lender to speak of in this country.  Don’t you think pretty much all of us know that, Senator?

There won’t be any lending by private sector banks in this country until… well, until there ARE some private sector banks in this country.  As of today, all I can see are a bunch of zombie banks, propped up with virtually unlimited free cash from then Federal Reserve, and by the suspension and modification of accounting rules, and even so, still heavily in debt to the tax-payers… JPMorgan Chase, as of last October, still owed us about $32,837,870,000 according to the very easy to read spreadsheets that author, and ex-Goldman Sachs managing director, Nomi Prins is nice enough to keep updated on her Website.

You see, it’s those darn toxic assets, Senator… the ones that were clogging up the bank balance sheets back in the fall of 2008, you know… when it all came out that the banks had OVER BORROWED to the tune of about 40:1 and much more, and that’s without counting the off-balance sheet crap that you and I both know should be illegal ever since ENRON showed us how much fun accounting isn’t when there are no rules and no trustworthy auditors on the job.

Yes, these toxic assets are… can you guess, Senator?  Good!  That’s right… even more toxic, that’s correct.  And why would that be, sir?  Good again… because you guys forgot to do anything to stop the foreclosures from destroying the asset values of our housing markets, and guess what’s toxic about the toxic assets, Senator Shelby… it’s the mortgages, sir.  So, every time another house goes down to foreclosure, another mortgage-backed security goes bad, as do all of the derivatives whose values are “derived” from that mortgage-backed security.

It’s sort of a knee-bone’s-connected-to-the-ankle-bone-thing, sir.  Maybe you could sing that little ditty to yourself every time this subject comes up… it might help you to remember what the hell you’re talking about, Senator Shelby.

And if you don’t like that idea, sir… perhaps use a magic marker to make a note on your hand, or tie a string around your finger… I don’t care if you have your assistant tickle your testicles to keep this stuff top-of-mind, it would just be gosh darn lovely if once in a while when you opened your mouth, you sounded like you had some faint idea of what you were talking about, Senator Shelby… you know… like maybe if you did it just once, half of the old men in the senate would likely soil themselves.

Yes, those toxic assets we all heard so much about, during the fall of 2098 are for the most part, right where they were way back then on… AND OFF… of the balance sheets of our Too-Big-To-Fail… Too-Big-To-Save and, Lord knows… Too-Big-To-Prosecute banks.

In fact… Shhhhhhh…. please… be quiet.  One of the bankers might be resting right now, and as of last week, they are also to be considered Too-Big-To-Wake-Up-From-A-Nap.  Thanks for understanding…

So, tell me something, Senator Shelby… if we gave the bankers $13 TRILLION to stimulate lending, and it didn’t accomplish a damn thing in that regard, why would fining the all the servicers combined a measly $20 billion have any effect at all, one way or the other.

Do we all understand “TRILLION” here?  It’s okay if you don’t… it’s a pretty big number, after all.  Chances are a trillion is not a number you’re going to bump into even if you live to be a hundred and fifty years old… twice.  Here’s what I use to help me realize just how large numbers like that truly are…

A million seconds = 12 days.

A billion seconds = 32 years.

A trillion seconds?  32,000 years!

So, if we convert our banking/lending fear mongering example of yours into seconds, we’ve already given the banks 416,000 years, and you’re trying to tell us that if we make them give us 640 of those years back that they won’t be lending as a result?  640 out of 416,000 is a deal killer, Senator?

Man, these seem like some very touchy bankers, don’t you think, sir.  If you’re right and the 640 out of 416,000 is, in fact, going to upset their apple cart like that, not that they’re lending now, or that they have any plans to “jump-start” any such thing anytime soon… but, I’d say we need to fire these girls we’ve got running our banks, and get some more resilient types at the respective helms of our nation’s largest financial institutions.

Because, Senator Shelby… that sounds like we’ve got TROUBLE… It sure sounds like TROUBLE… I’m talking real TROUBLE… right here in River City… and look who’s here, sir… why, it’s Professor Harold Hill!  Did you order The Music Man, sir?  Let’s listen, I love this musical, sir…

Professor Harold Hill: Well… I’d say you’ve got trouble, my friends.  That’s right real serious trouble.  And it’s right there in your city.  Great big trouble… and not just any kind of trouble… it’s the kind of trouble that means you gotta’ stay sharp… Because the trouble I’m here to sing about started with TARP!

Cause you’ve got TARP…. And it’s not at all pretty

With capital T-A-R-P and ‘F’ which stands for FOOL

Oh yes, we’ve got TARP… Chase, Wells and Citi

Their lending got wiped out by those toxic pools.


Yes, you’ve got TARP… an idea so shitty…

With a capital T-A-R-P and ‘B’ which stands for BANK.

Oh yes, you’ve got TARP… Chase, Wells and Citi

For the people it was a deal that really stank.


You’ve got TARP… terrible, terrible TARP… we bailed out banks you called Too-Big-To-Fail.

Oh, you’ve got TARP, TARP, TARP (yes, you’ve got TARP, TARP, TARP)

Instead we should have sent them all to jail.

Oh you’ve got TARP, TARP, TARP… yes, they call it TARP, TARP, TARP… TARP, TARP, TARP… (Fade out…)

Where are you going, Senator Shelby?  Aren’t you going to stick around until the end?  It’s awful rude to walk out during a musical, sir… what will your constituents think, sir?  Senator Shelby… sir…?

Oh well… he probably had a meeting scheduled… I’m sure he’s busy this week, I’m told tomorrow is “Blow-a-Banker Day” in the District of Colombia.  I didn’t even think about that, because in California, we don’t celebrate it until late May.

It’s too bad though, because there was one more area I wanted to cover with him.  You see, getting back to American Banker’s article again… Senator Shelby and a couple of the other prominent House Republicans, were also attacking Elizabeth Warren’s involvement in the Consumer Financial Protection Bureau, because apparently she’s the one asking for the $20 billion from the servicers, wouldn’t you know.

So, it seems the other day good senator came right out and said:

“Just last year, I warned that the new Bureau of Consumer Financial Protection would prove to be an unaccountable and unbridled bureaucracy. I did not expect to be proven correct so quickly,”

(Memo to Senator Shelby: Don’t worry, sir… you weren’t.)

American Banker got a copy of a letter sent by Shelby, along with House Financial Services Committee Chairman Spencer Bachus, and Rep. Scott Garrett (R-N.J), and although they didn’t mention Elizabeth Warren by name, here’s what the letter said, among other things of course…

“Reports about the role played by political appointees in the Treasury Department — including those affiliated with the Consumer Financial Protection Bureau, an agency that does not yet have any regulatory or enforcement authority — raise further question about the process through which the terms of the settlement are being negotiated.”

I’ll tell you what… these Republicans are two things for damn sure:

  1. Totally in the pocket of the banking lobbyists… and the bankers themselves, of course.
  2. Really petty people for grown-ups.

They’re actually all upset because of Elizabeth Warren’s new federal agency, the Consumer Financial Protection Bureau, Is not yet officially open for business… and doesn’t officially until July… so therefore, she shouldn’t bring up any of her trouble-making ideas until then?

Boys, boys, boys… you just don’t get it do you?  The people HATE the bankers for what they’ve done these past two years, and you’re going to find out the hard way what happens to politicians who are so flagrantly on the side of the bankers in the next election.  The Dems got shellacked for the same thing last time out, or didn’t you realize?  Watch out… I’m telling you the backlash has been building and it’s going to explode…

Here’s Shelby one more time from the article in AB, making his point about Liz…

“The process by which it is being imposed is potentially far more concerning,” Shelby said. “The proposed settlement would fundamentally alter the regulation of our banks. Yet, this would be done without Congressional involvement. Instead, it would be done by executive fiat through intimidation and threats of regulatory sanctions.”

But, you see… that’s what’s so funny, because… well, because lately I’ve come to realize that there are quite a few people that think that TARP was THE banking industry’s bailout… but that’s not true at all… in fact, the $700 billion TARP fund, was actually the smallest of all the banking industry bailouts we provided in the last two years, and there were more before that.

Now, TARP is the one with the most memorable acronym… rhymes with “harp” and “carp,” but the others were funded into the TRILLIONS, as you can see below.  The thing is… none of these banking industry bailouts went through Congress either… that is to say that we authorized all of these TRILLIONS in taxpayer dollars… “without Congressional involvement,” to use Senator Shelby’s own words from his quote above.

I don’t recall Senator Shelby or either of the other two House Republicans that wrote the letter to Geithner about the 27-page AG Term Sheet proposal, bellyaching about that, do you?  It’s rhetorical… they, of course, didn’t say a word.

Quiet like church mice when we’re giving the bankers trillions, but try to fine the servicers for doing stuff they should really be in joal for, and the bankster politicians come running out onto the floor of the House or Senate every hour on the hour, yelling… Cukoo!  Cukoo!

Just below is a list of the less publicized taxpayer funded banker bailout programs from the last two years.  I’ll look them all up over the weekend and try to post an article explaining what each one was supposed to be for, and how much was spent to-date… stuff like that.

It pisses me off that they play games like this with all of us… they say… lookie over there… TARP, TARP, TARP… and then while we’re distracted, they spend trillions of our money without going through Congress.

Shelby’s fine with it, however, as long as it doesn’t negatively affect the bankers in any way… or come from The Desk of Elizabeth Warren… the ONLY person in Washington D.C. to even suggest that the servicers be fined as a result of what they’ve done to homeowners for three years… the ONLY one.

But Shelby shouldn’t worry his hypocritical little head over it, because she’ll be gone by July, so yet another win for the banksters… yay.

TLGP – The Temporary Liquidity Guarantee Program – $1.5 trillion

GSEP – Government Sponsored Entity Purchases  – $1.4 trillion

CPFF – Commercial Paper Funding Facility – $1.4 trillion

TALF – Term Asset-Backed Securities Loan Facility – $200 billion

TAF – Term Auction Facility – $600 billion

AMLF – Asset-Backed Commercial Paper Mutual Fund Liquidity Facility – $1.6 trillion

FEDS – Foreign Exchange Dollar Swaps – Undisclosed

PDCF – Primary Dealer Credit Facility – Undisclosed

(I’m pretty sure when they say “undisclosed” where the amount goes, it’s because it’s a really small number, aren’t you?  Of course you are… Geithner wouldn’t not disclose a really big number, would he?  Not Transparency Tim… no way in the world.)

Mandelman out.


Servicing Letter to Geithner

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