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Criminal Prong Emerges In Foreclosure Fiasco (Naked Capitalism)
Fraud, Not Securitization, To Blame For Mortgage Mess (Washington’s Blog)
In keeping with my BP oil spill/foreclosure crisis analogy, things just keep getting uglier everyday while executives try to do public damage control. In this edition, at least we have independent voices with the capability of finding out the truth. The Feds are investigating whether firms used fraudulent mortgage documents to seize homes. The charges could also include mail or wire fraud commissions. The ACLU is also investigating whether due process was violated when families were unlawfully removed from their homes. Even further along the line, foreclosure expert Neil Garfield has done some investigating as to how loans were ‘securitized’ in the first place. He found that loans were not actually attributed to any particular asset (securitization), but rather allocated within a pool of receivables to multiple parties (fraud). Paperwork was created out of thin air to cover the difference in value between what investors bought and the actual ‘loans’. These big firms made an illegal bet and lost, plain and simple. But to this point, unsuspecting taxpayers are the only ones who have had to pay down the losses.


Foreclosure Fraud for Dummies: Part 1, Part 2, Part 3, Part 4 and Part 5 (Mike Konczal at New Deal 2.0)
Mike Konczal produced a succinct summary of the current foreclosure crisis that I feel compelled to share with our readers. The five-part series has made its rounds around the blogosphere over the last week because it is such a well-constructed overview of the causes and ramifications of the crisis. The work is self-explanatory; do yourself a favor and give it a look.

Income Inequality More Than Just A Philosophical Debate (Economist’s View)
Losing Democracy To Plutocracy (Robert Reich)
Economists often abstain from passing judgment on the effects of income inequality, passing it off as a philosophical argument. The question is not whether the gap between the rich and the poor in our country is accelerating (it is) but whether or not that is such a bad thing. But economics was born out of moral philosophy and the debate must be undertaken from both perspectives. The ultrarich do not derive any greater happiness quotient from adding a 5,000 extra sq ft to their 30,000 sq ft home, and the widening gap makes it harder for middle class families to meet societal expectations while accomplishing financial goals. With income concentrated within such a tight group, money is hoarded by the uber-rich and money spent is often unproductive, and middle class families are forced to increase debt in order to meet more expensive community norms. The polarization of incomes has also led to the increased polarization of politics in our country to the detriment of the low and middle class. The further down the gap widens, the harder it will be to close. 

PermaBear to English Translation Guide (The Big Picture)
Time to add a bit of humor to today’s proceedings. PermaBears are a cantankerous bunch, and this guide from Barry Ritholtz should help you clarify their perspective. Enjoy.

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