Main Street

Read of the Week

Matt Taibbi’s look at fraudclosure has too much information to do justice to here; the only thing to do is go read the whole thing.

Here’s the big picture—and it is big:

But in reality, it’s the unpaid bills that are incidental and the lost paperwork that matters. It turns out that underneath that little iceberg tip of exposed evidence lies a fraud so gigantic that it literally cannot be contemplated by our leaders, for fear of admitting that our entire financial system is corrupted to its core — with our great banks and even our government coffers backed not by real wealth but by vast landfills of deceptively generated and essentially worthless mortgage-backed assets.

You’ve heard of Too Big to Fail — the foreclosure crisis is Too Big for Fraud. Think of the Bernie Madoff scam, only replicated tens of thousands of times over, infecting every corner of the financial universe. The underlying crime is so pervasive, we simply can’t admit to it — and so we are working feverishly to rubber-stamp the problem away, in sordid little backrooms in cities like Jacksonville, behind doors that shouldn’t be, but often are, closed.

Along the way you get a courtroom where the judge has it as his goal to go through 25 cases per hour, objects to a reporter witnessing what he’s doing (and threatens the lawyer who brought Taibbi to court), and in every case gives the banks the benefit of the doubt while foreclosing without a second glance on person after person. Taibbi explains the scope of the fraudulent paperwork the banks are pushing, and why it’s in their interest to foreclose no matter what—which gets back to the fact that they were selling mortgages as investments without regard for whether the mortgages actually were sound investments.

The scope of what’s going on is astounding, and it’s a story that’s playing out on so many levels—the huge question of securitization and Wall Street pushing risky “investments,” the day to day bank practices of going to court with robosigned foreclosure documents and no clue where the actual mortgage note is, and people losing the homes they have actually paid for, or made a good-faith effort to negotiate reduced payments on. Read the whole thing.

Tags: foreclosure crisis