The Quarterly Report issued in October 2011 by the Special Inspector General of the Troubled Asset Relief Program (TARP) reveals the utter lack of oversight and mismanagement of funds in excess of $700 Billion Dollars.  The 316 page report begins:

Through the Troubled Asset Relief Program (“TARP”), the American taxpayers became investors in hundreds of financial institutions, the auto industry, and cer­tain markets for asset-backed securities, and the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) serves on the front line to protect those investments. SIGTARP is the only agency solely charged with a mission of transparency, oversight, and enforcement related to the taxpay­ers’ unprecedented investment of hundreds of billions of dollars in the private sector…. This month…the first criminal charges were filed against senior executives of a TARP bank when two senior executives of United Commercial Bank (“UCB”) were charged in connection with an alleged scheme to defraud investors. The Department of Treasury (“Treasury”), and by extension the American taxpayer, became investors in UCB’s holding company when it received more than $298 million in TARP funds. UCB was the first TARP bank to fail and the taxpayers’ entire TARP investment is lost.

TARP included $45.6 Billion to fund the Home Affordable Modification Program (HAMP) of which only $2.5 Billion (5.4%) has been spent.  SIGTARP addressed its concerns about the poor performance of the HAMP program to the Treasury Department, but states that “Treasury has determined not to take any further action to implement SIGTARP’s recommendations. Treasury is giving up a chance at mean­ingful change and sadly, it is struggling homeowners who have the most to lose.”

The housing and mortgage crisis was a direct result of the increasing deregulation of the mortgage industry enabled by the Community Reinvestment Act of 1977 and the federal government’s ideological philosophy that everyone should and must be afforded their dream of home ownership, regardless of their credit worthiness or their ability to repay the mortgage. The federal government, through coercive threats of lawsuits for discriminatory lending practices, forced these lenders to make these risky loans.

The feeding frenzy of easy money, teaser interest rates, one hundred percent financing (generally involving two mortgages, a first mortgage for eighty percent of the purchase price and a second for the remaining equity, thereby eliminating the necessity for private mortgage insurance), no income or asset verification of the homebuyer and, in many cases where homebuilders were involved, up to one full year of mortgage payments paid in advance by the builder at closing in addition to the payment of all of the closing costs, increased the demand for new homes and drove up home prices.  An additional caveat of the 80/20 scheme eliminated the requirement that the homebuyer escrow money with the lender for payment of property taxes and homeowners insurance.  This resulted in massive losses of revenue at the city, county and state level.

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From Business Insider:

Stephen Lerner

[Former SEIU Official Stephen] Lerner said that unions and community organizations are, for all intents and purposes, dead. The only way to achieve their goals, therefore–the redistribution of wealth and the return of “$17 trillion” stolen from the middle class by Wall Street–is to “destabilize the country.”

Lerner’s plan is to organize a mass, coordinated “strike” on mortgage, student loan, and local government debt payments–thus bringing the banks to the edge of insolvency and forcing them to renegotiate the terms of the loans. This destabilization and turmoil, Lerner hopes, will also crash the stock market, isolating the banking class and allowing for a transfer of power.

Lerner’s plan starts by attacking JP Morgan Chase in early May, with demonstrations on Wall Street, protests at the annual shareholder meeting, and then calls for a coordinated mortgage strike.

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From The New York Times:

Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress.

The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating.

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The document trail below reveals some extremely troubling questions for Representative Barney Frank. Is the GAO report cited below truly the first serious investigation of the mortgage meltdown? Did Congress or the Financial Services committee he chairs have access to mortgage meltdown information from other sources, especially with said GAO report already well on its way to completion?

Why was Barney Frank pushing for his “expanding home ownership bill” in the midst of this looming crisis he already has good reason to suspect was going to get worse? Was he pushing it for purely political purposes prior to the 2008 election, while knowing full well the American housing market was headed for disaster and American taxpayers would be left on the hook as a result of his policies?

While not quite a smoking gun, an examination of the record suggests that while Rep. Barney Frank had good reason to be concerned of a pending meltdown in the housing sector, either out of sheer incompetence, or political maneuvering, he did the exact opposite of what he should have done as a representative of the people of Massachusetts.

Via Mortgage News Daily, on April 24, 2007, problems within the mortgage industry were already coming to light. And it was happening right in front of Barney Frank’s committee.

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Big banks have been under fire for using improper documents to foreclose on homes. Well, Congress stepped in to help, quietly passing a bill that could shield the banks from liability. From Reuters:

The law, the “Interstate Recognition of Notarizations Act,” requires all federal and state courts to recognize notarizations made in other states.

The law specifically includes “electronic” notarizations stamped en masse by computers. Currently, only about a dozen states allow electronic notarizations, according to the National Notary Association.

“CONSTITUENTS” PRESSED FOR PASSAGE

After languishing for months in the Senate Judiciary Committee, the bill passed the Senate with lightning speed and with hardly any public awareness of the bill’s existence on September 27, the day before the Senate recessed for midterm election campaign.

The bill’s approval involved invocation of a special procedure. Democratic Senator Robert Casey, shepherding last-minute legislation on behalf of the Senate leadership, had the bill taken away from the Senate Judiciary committee, which hadn’t acted on it.

The full Senate then immediately passed the bill without debate, by unanimous consent.

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The activity surrounding the controversial Consumer Financial Protection Agency (CFPA) in the financial reform legislation is really picking up these days.  But many Americans would never know it.  It seems Democrats may have learned something from the experience of the health care bill after all.  In their efforts to avert a repeat disaster of losing control of the message, they appear to be taking every step necessary to ensure that the public engages as little as possible in this debate.

But I assure you, this is a debate that the American public should engage in, pronto.

Because behind the scenes, certain lobbyists are quietly but aggressively scurrying about, pushing hard for the passage of the CFPA in a power grab by the Executive Branch that would dwarf the Health Care Reform bill and the Patriot Act.  And with the passage of the proposed CFPA, one man in particular with a history tied to some of the deepest tentacles in the financial crisis – and to the Community Reinvestment Act changes of 1995 – would gain the power to selectively manipulate the entire landscape of the financial, small business and housing markets.

Last week, we reintroduced you to an early trigger in the financial crisis, with good reason. In “Death by Senator: As Financial Reform Looms, We Revisit IndyMac,” we revisited the role that Senator Chuck Schumer’s (D-NY) very public letter played in the fall of one financial institution.  As I ended that piece, I teased that there was more to the story that would soon follow.

So, let’s pick up from June 30, 2008.

Merely days after the now infamous Schumer letter triggered a run on the bank that would total over $1.3 billion, this lengthy and scathing report was released to the public:

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Now that the health care bill has been passed into law, many Americans are asking, what’s next? Will it be Immigration Reform?  Will it be Cap and Trade in the Senate?

Take a cue from the White House’s recent announcement to use TARP funds to expand the housing aid program, which will also enable some homeowners to refinance their current private-lender mortgages through the Federal Housing Administration (FHA) instead.  And if you’ve followed some of my SEIU posts in recent months, you know very well that Financial Reform has been number two on their list.

Just days ago, the Senate Banking Committee approved Senator Chris Dodd’s (D-CT)  financial reform proposal, the Restoring American Financial Stability Act of 2010.  Behind the scenes, Dodd is said to have been working with House Financial Services Committee Chairman Barney Frank (D-MA) to negotiate a final version of the bill that the House will approve.  Just two weeks before it passed the Health Care bill last December, the House passed H.R.4173, the Wall Street Reform and Consumer Protection Act of 2009.  While Dodd’s bill is viewed as less stringent than the House bill, both include a controversial stand-alone Consumer Financial Protection Agency (CFPA).  If these next several weeks of closed-door negotiations are successful, word on The Hill is that we could see financial reform enacted by Memorial Day.

The proposed legislation, most specifically the CFPA, extends far beyond Wall Street; it will expand government even further and give it unprecedented powers like never before.  And with more government power comes the potential for abuse.

Let’s be reminded, for example, of what Senator Chuck Schumer did to one financial institution in 2008.

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In the wake of his divisive subpar first year, it is plainly evident that Obama has switched to campaign mode.  If we recall that Reagan told us that Democrats campaign for President as moderates and govern from the Left, we understand well why Obama sounded centrist in 2008, pursued a Leftist agenda in 2009 and, in this midterm election year, is now reaching out to Republicans.

We know that Obama has given his Presidential campaign advisor an “expanded” White House role.  In addition to that, Obama, in a high profile manner, met with Congressional Republicans on Health Care and is reaching out to them on a jobs bill among other tactics.  In the face of such Clintonesque triangulation, the questions become:  What should the Republicans do?  Meet Obama half way?  Stonewall him?  Or offer their own agenda?  Given that the political handshake can often be the kiss of death, especially in a Tea Party World, Republicans need to go on the offensive by framing the debate if they are going to avoid Obama’s Bermuda Triangulation.

It is essential to note that whoever frames the election debate is the likely winner of the election. Democrats win elections by promoting what government can do in the face of adversity that they blame on capitalism or the market.  Republicans win elections by exposing the limits and detriments of government in addition to trumpeting the limitless values of freedom and the American spirit.

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