Today's reading brought several stories that have me shaking my head:
From Bloomberg Business Week comes the revelation that in 2008 then Treasury Secretary Henry Paulson gave hedge fund managers advance warning of the rescue of Fannie:
William Black, associate professor of economics and law at the University of Missouri-Kansas City, can't understand why Paulson felt impelled to share the Treasury Department's plan with the fund managers.
“You just never ever do that as a government regulator — transmit nonpublic market information to market participants,” says Black, who's a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”
Janet Tavakoli, founder of Chicago-based financial consulting firm Tavakoli Structured Finance Inc., says the meeting fits a pattern.
“What is this but crony capitalism?” she asks. “Most people have had their fill of it.”
Here’s New Orleans Bankruptcy Judge Elizabeth Magner discussing problems at Lender Processing Services, the company that handles 80 percent of foreclosures on behalf of large banks (emphasis added):
In Jones v. Wells Fargo, this Court discovered that a highly automated software package owned by LPS and identified as MSP administered loans for servicers and note holders but was programed to apply payments contrary to the terms of the notes and mortgages.
The bad behavior is so rampant that banks think nothing of a contractorprogramming fraud into the software. This is shocking behavior and has led to untold numbers of foreclosures, as well as the theft of huge sums of money from mortgage-backed securities investors.
Here’s how the fraud works: Mortgage loan notes are very clear on the schedule of how payments are to be applied. First, the money goes to interest, then principal, then all other fees. That means that investors get paid first and servicers, who collect late fees for themselves, get paid either when they collect the late fee from the debtor or from the liquidation of the foreclosure. And fees are supposed to be capitalized into the overall mortgage amount. If you are late one month, it isn’t supposed to push you into being late on all subsequent months.
The software, however, prioritizes servicer fees above the contractually required interest and principal to investors. This isn’t a one-off; it’s programmed. It’s the very definition of a conspiracy! Who knows how many people paid late and then were pushed into a spiral of fees that led into a foreclosure? It’s the perfect crime, and many of the victims had paid every single mortgage payment.
While those stories are infuriating the next one is downright scary. Let me say up front that I realize the source for this one is the ACLU blog, but please disregard your personal feelings about the organization and pay attention to the story:
The Senate is going to vote on whether Congress will give this president—and every future president — the power to order the military to pick up and imprison without charge or trial civilians anywhere in the world. Even Rep. Ron Paul (R-Texas) raised his concerns about the NDAA detention provisions during last night’s Republican debate. The power is so broad that even U.S. citizens could be swept up by the military and the military could be used far from any battlefield, even within the United States itself…
In support of this harmful bill, Sen. Lindsey Graham (R-S.C.) explained that the bill will “basically say in law for the first time that the homeland is part of the battlefield” and people can be imprisoned without charge or trial “American citizen or not.” Another supporter, Sen. Kelly Ayotte (R-N.H.) also declared that the bill is needed because “America is part of the battlefield.”
The solution is the Udall Amendment; a way for the Senate to say no to indefinite detention without charge or trial anywhere in the world where any president decides to use the military. Instead of simply going along with a bill that was drafted in secret and is being jammed through the Senate, the Udall Amendment deletes the provisions and sets up an orderly review of detention power. It tries to take the politics out and put American values back in.
UPDATE: Don’t be confused by anyone claiming that the indefinite detention legislation does not apply to American citizens. It does. There is an exemption for American citizens from the mandatory detention requirement (section 1032 of the bill), but no exemption for American citizens from the authorization to use the military to indefinitely detain people without charge or trial (section 1031 of the bill). So, the result is that, under the bill, the military has the power to indefinitely imprison American citizens, but it does not have to use its power unless ordered to do so.
But you don’t have to believe us. Instead, read what one of the bill’s sponsors,Sen. Lindsey Graham said about it on the Senate floor: “1031, the statement of authority to detain, does apply to American citizens and it designates the world as the battlefield, including the homeland.”
There you have it — indefinite military detention of American citizens without charge or trial. And the Senate is likely to vote on it Monday or Tuesday.
If what the piece asserts can happen even comes close to actually happening then I honestly think it's the one action Congress could take that might cause the NRA and ACLU to get in bed together. Okay that's just plain creepy, but we do live in strange times my friends.