Faces Of Foreclosure

Bloomberg.com News
January 28, 2010
Michael Smith

Banks Financing Mexico Gangs Admitted in Wells Fargo Deal

“The LOVE of money is the root of all evil.”

Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.

They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.

The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

‘Blatant Disregard’

Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.

Since 2006, more than 22,000 people have been killed in drug-related battles that have raged mostly along the 2,000-mile (3,200-kilometer) border that Mexico shares with the U.S. In the Mexican city of Ciudad Juarez, just across the border from El Paso, Texas, 700 people had been murdered this year as of mid- June. Six Juarez police officers were slaughtered by automatic weapons fire in a midday ambush in April.

Definition of evil . . . this one from Princeton.edu:

• morally objectionable behavior
• morally bad or wrong; “evil purposes”; “an evil influence”; “evil deeds”
• that which causes harm or destruction or misfortune; “the evil that men do lives after them; the good is oft interred with their bones”- Shakespeare
• having the nature of vice
• the quality of being morally wrong in principle or practice; “attempts to explain the origin of evil in the world”
• malefic: having or exerting a malignant influence; “malevolent stars”; “a malefic force”

And from an online “wiktionary:”

•The forces/behaviors that are the opposite or enemy of good. Evil generally seeks own benefit at the expense of others and is based on general malevolence; Any particular individual or state which may follow these forces or behaviors; Intending to harm; malevolent; Morally corrupt; Unpleasant

I thought I had a 7-year loan modification from Wells Fargo. Well, maybe not . . . I don’t believe this.

VERY IMPORTANT: The very second you start negotiating with your lender regarding a loan modification, get a large binder and put everything in it. You will need it. During the Home Modification workshop with Wells Fargo, they repeatedly said they did not have this or that document. I did AND I had the FAX confirmation that it was sent to them and received. I handed it to them and said, “please make a copy and bring this right back to me.” We did that four or five times. I’m sure they were looking for a reason to NOT modify.

On May 24, 2010, I met with Wells Fargo at a Home Modification workshop they held in Oakland, California. I had been trying to get a loan modification for 18 months. This started out in December 2008 as a projected six months of financial strife, after which time two retirement incomes would kick in and I could get back on track financially. My goal when I purchased my home in 2006 was to pay it off in five years because of the retirement incomes. It was all looking good until cancer (through which I worked), followed by a job layoff in 2008.

Wells Fargo helped stretch my potential six-months of strife into 20 months so far and I don’t see an end to it. (That image is of my 20 pound, 6 inch thick — and growing — binder.)

I came away from the modification workshop quite pleased and thinking I actually had a decent loan modification for five years — time to help me find the money to pay off this loan and get away from Wells Fargo for the rest of my life. And an opportunity to help others figure out their way through this financial maze.

Wells Fargo is either the most crooked corporation I’ve seen in more than 50 years of working in corporate America — including a stint in the corporate finance department at a major bank — or they are the most inept.

In either case, if they have your money, you should be worried. Wells Fargo is featured in various class actions across the nation and are an international financial collaborator with HSBC out of London, which is being investigated on three continents.

At that workshop, I signed an agreement with Wells Fargo, figured I bought a five-year “stay of execution,” and started to work on increasing my income with the prayer of being able to pay them off in the five year period. (The modification is actually for seven years, but it is not good in year six or seven.)

Today I received a statement dated July 5, 2010 (it is July 15 as I write this). It is 9:56 p.m. ’cause I just finished working from 8 a.m. this morning building Websites. (I am DETERMINED to pay off these bankers. There has to be a way.)

The agreement, which I have paid for two months, is roughly $2500/month (or $2,000 a month depending on which document I read); this statement is for $4,074.54 per month, and has tacked onto it $170.36 as late fees, two unapplied payments, the statement that $76,683.40 is due by August 1st.

I have the original agreement; it does NOT escalate to $4,074.54 per month in August of this year and $76,683.40 is NOT due on August 1st. This is insane, and it is NOT me that is insane.

Where is our government and/or our system of justice through this — either local judges or supervisors or governors or anyone? Have they all decided we are “wrong?” Are they married to lenders?

I can barely breathe. For the first time in my life I know what a “battered wife” must feel like. My back between my shoulders aches as though someone were pummeling me. I’m actually not a dramatic person, but I am a fighter. Put me in a corner and I will come out kicking. At this point, I don’t know who I am fighting. Wells Fargo agreed to a modification. This paperwork ignores that agreement. Who runs this company? Dumb question?

An aside. I heard someone at a meeting last week mention that Wells Fargo was going to institute drug testing to its employees — given his level, I assumed he meant middle-level executives. Turns out that 80% of them, per his information, tested positive for cocaine. Given that coke is the middle-level executive drug, and given how Wells Fargo is currently operating, I don’t doubt him.

I contacted Wells Fargo’s executive offices in Des Moines, Iowa. They had no answer as to why this continues, but said they will remedy it. Sure.

Following that conversation, I came home on Sunday, July 18th, 2010 to see a notice stuck in my front door . . . no name, no signature and no envelope. A good breeze would have blown it away . . . so much for “effort to make contact” and confidentiality.

That notice reads:

Please Call: Wells Fargo Home Mortgage
Contact: Loan Administration
At: 800 766 0987
Notice: Our Representatives called on you today while you were out. There is an important matter we would like to discuss with you. This inspection is not in any way an attempt to collect a debt.

I called on July 19, 2010 at 8:27 a.m.: Lolitha (EN5) in Wisconsin couldn’t help. She didn’t know why the notice was on the door. I called and left a voice mail for Teresa Warnock in the offices of the President of their mortgage in Des Moines, Iowa. Teresa called back and sounded as confused as am I. My “case” is being monitored by someone else in their offices as there is an “internal issue” they are trying to resolve.

And, no sooner do we hang up then I get yet another “Loan Modification Agreement” delivered via FedEx from Wells Fargo. This one seems to duplicate the one dated April 22, 2010 and it is, in fact, dated that same date. And it STILL is not per my understanding from the April meeting of a fully amortized PITI.

Dreaming Up America by Russell Banks

“A thoughtful and provocative meditation on our history, with a chilling look at what has happened to the American dream.” –Howard Zinn

Because my background is English literature and I worked for years in media and my operating word is “why,” I couldn’t help it. I looked up the word evil. Wikipedia has it as:

Evil is the intention of causing harm or destruction while threatening or deliberately violating morality. Largely due to the subjectivity of the word morality (which may refer to a society’s moral code, one’s own moral system, relative morality, absolute morality, etc.), there is no agreement about whether evil is a matter of social custom or universally correct principle that overrides custom. Evil, however, is most commonly used to refer to any intention that is socially perceived as the antithesis of a morally right or good intention.

Yes, this is subject to interpretation, and my interpretation — along with millions of Americans — is that these lenders may be evil. And while you are ruminating over whether or not they are evil, please know that they are absolutely inept; if you are not yet worried about who has your money and/or investments, you should be.

This is so sad. Many people, me included, worked 50-60 years for a gracious retirement. What am I doing? Fighting with an institution that I know beyond the shadow of a doubt is inept and crooked if you view their history — they cut a deal with Pancho Villa is the early 1900s — and that was documented by university libraries.

Does anyone have a clue as to what we do? We KNOW what is going on. How are these lenders stopped?

My notes keeping track of this fiasco started in December 2008; they are now 15 pages long.

I told them I am billing them for my time spent on trying to clear up this mess and the repeated FAXing of documents that they repeatedly lose. I now average $100/hour working from home. I have spent easily 2 hours per day keeping track of this. So: $100/hour x 2 hours per day x 5 days per week x 20 months = roughly $80,000 . . . not counting all the money wasted in FAXing documents to them repeatedly.

After 18 months of trying for a loan modification through Wells Fargo Bank, and after 8 months of working with a group fighting lenders, it is painfully clear that we have been duped across the nation. (The image is of the binder I have been keeping since December 2008. Wells Fargo lost one of my payments in 2007; it took weeks to straighten that out. So it seemed prudent to begin keeping a file of all correspondence with that lender. The binder is now six inches thick and weighs 20 pounds. My conclusion is that Wells Fargo is either insanely incompentent or frightenly corrupt — it is definitely one or the other or both, but their actions have nothing to do with good business practices and/or ethics.)

Yesterday, during a conversation with a worldly and knowledgable couple, who read the New York Times, Wall St. Journal, San Francisco Chronicle and the Marin Independent Journal, it was clear that they knew little of our national debacle (which has created an international debacle). Because newspapers cater to advertisers — even though they will swear they do NOT — the news you read is couched so as to not overly offend major advertisers and banks ARE major advertisers.

From Living Lies:

THE INCONVENIENT TRUTH: Profits piled up off-shore that are being repatriated on a gradual basis showing incredible gains at the Wall Street Banks that supposedly lost hundreds of billions of dollars. The truth is they never lost a dime. The truth is the loan was sold multiple times through multiple intermediaries each of whom in each “sale” were paid fees and profits vastly exceeding any prior compensation to those who arranged or made loans prior to securitization.

Second Hidden Yield Spread Premium: As I have pointed out before the hidden yield spread premium was jaw-dropping (when the loans were packaged by the aggregator and then sold to the Special Purpose Vehicle that issued and sold the mortgage-backed securities. This second YSP was sent off-shore to the Bahamas or the Caymans to Structured Investment Vehicles with their own trustees, who scattered the actual depository accounts all around the world. The beneficiaries were the 100 Club — the main players in the creation, promotions and protection of the scheme through government contacts, plausible deniability, and simple non-disclosure sometimes achieved through the sheer complexity of the arrangements.

Know Your Rights: The U.S. Constitution: And Fascinating Facts About It If you are new to the fight to save your home, you are going to think some of us who have been in the midst of this for 1-2 years are nuts. We’re not. We are hard-working responsible citizens who are being trampled on by not only lenders, but sometimes by local officials, some of whom have interests in the very banks we are up against. One of my early stops in the effort to get help was to Legal Aid of Marin County. The director of that agency, Paul Cohen, who has received funds to help people, handed me a one-page sheet on when I could expect to lose my home. He offered no help. Were it up to Mr. Cohen, I would be living under a bridge in a tent with a feral cat or two. My Cohen and his Legal Aid are a disservice to community. Were it up to me, he would be seeking new employment. My surname is Jewish, thus this is not from any type of prejudice; he is simply incompetent, he had my life in his hands, and he did NOTHING. I’m at an age where recovering from losing my home would be impossible.

Nobody wants to acknowledge this fact because it would be admission that the con game is still on and that government is still part of it. They took many trillions of dollars to “bail out” banks that had arranged the bad loans but never underwrote them.

The repercussions of what lenders have done during the past decade is playing out across the nation. People who worked hard to grow and provide for their families are sinking.

From the New York Times:

. . . The mayor and former bank loan officers point a finger of blame at large national banks — in particular, Wells Fargo. During the last decade, they say, these banks singled out blacks in Memphis to sell them risky high-cost mortgages and consumer loans.

(Editor’s Note: I don’t think the banks were as picky as stories would have it. It seems to me that people of ALL races have been hurt and wrote about this as Equal Opportunity Prejudice!.) The group I work with — Families Fighting Forelosure is pretty well balanced between Black, Hispanic and White and everywhere from around 30 years of age to 73 years of age. There does not seem to be a common denominator except that, perhaps, we trusted our lenders and did not read every single word of those loan documents. I was just told that I have an interest-only loan. In my opinion, negative-am loans and/or interest-only loans are insane. How does one ever own one’s home. I would not have agreed to an interest-only loan . . . thus my reason for having a forensic audit undertaken.

The City of Memphis and Shelby County sued Wells Fargo late last year, asserting that the bank’s foreclosure rate in predominantly black neighborhoods was nearly seven times that of the foreclosure rate in predominantly white neighborhoods. Other banks, including Citibank and Countrywide, foreclosed in more equal measure.

In a recent regulatory filing, Wells Fargo hinted that its legal troubles could multiply. “Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo affiliated entities, including whether borrowers were steered to more costly mortgage products,” the bank stated.

Wells Fargo officials are not backing down in the face of the legal attacks. They say the bank made more prime loans and has foreclosed on fewer homes than most banks, and that the worst offenders — those banks that handed out bushels of no-money-down, negative-amortization loans — have gone out of business.

From the Guardian, London, England

Now we know the truth. The financial meltdown wasn’t a mistake. It was a con.

(Editor’s Note: Really? You FINALLY caught on! Where you been?)

Hiding behind the complexities of our financial system, banks and other institutions are being accused of fraud and deception, with Goldman Sachs just the latest in the spotlight. This has become the most pressing election issue of all.

The global financial crisis, it is now clear, was caused not just by the bankers’ colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud. Friday’s announcement that the world’s most famous investment bank, Goldman Sachs, is to face civil charges for fraud brought by the American regulator is but the latest of a series of investigations that have been launched, arrests made and charges made against financial institutions around the world.

Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet levelled charges against any bank; all that we’ve seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government.

We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves.

Just consider the roll call beyond Goldman Sachs. In Ireland Sean FitzPatrick, the ex-chair of the Anglo Irish bank was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks huge lenders in Britain was handed to its public prosecution service.

A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters.

In Switzerland UBS has been defending itself from the US’s Internal Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come except in saintly Britain.

Beneath the complexity, the charges are all rooted in the same phenomenon deception.

Somebody, somewhere, was knowingly fooled by banks and bankers sometimes governments over tax, sometimes regulators and investors over the probity of balance sheets and profits and sometimes, as the Securities and Exchange Commission (SEC) says in Goldman’s case, by creating a scheme to enrich one favoured investor at the expense of others including, via RBS, the British taxpayer. Along the way there is a long list of so-called “entrepreneurs” and “innovators” who were offered loans that should never have been made. Lloyd Blankfein, Goldman’s CEO, remarked only semi-ironically that his bank was doing God’s work. He must wake up every day bitterly regretting the words ever emerged from his mouth.

For the Goldmans case is in some ways the most damaging.

The Icelandic banks, Anglo Irish bank and Lehman were all involved in opaque deals and rank bad lending decisions but Goldman allegedly went one step further, according to the SEC actively creating a financial instrument that transferred wealth to one favoured client from others less favoured. If the Securities and Exchange Commission’s case is proved and it is aggressively rebutted by Goldman the charge is that Goldman’s vice-president Fabrice Tourre created a dud financial instrument packed with valueless sub- prime mortgages at the instruction of hedge fund client Paulson, sold it to investors knowing it was valueless, and then allowed Paulson to profit from the dud financial instrument. Goldman says the buyers were “among the most sophisticated mortgage investors” in the world. But this is a used car salesman flogging a broken car he’s got from some wide-boy pal to some driver who can’t get access to the log-book. Except it was lionised as financial innovation.

The investors who bought the collateralised debt obligation (CDO) were not complete innocents. They had asked for the bond to be validated by an independent expert into residential mortgage-backed securities a company called ACA management. ACA gave the bond the thumbs-up on the understanding from Fabrice Tourre that the hedge fund Paulson were investing in it. But the SEC says Tourre misled them, a pivotal claim that Goldman denies. The reality was that Paulson was frantically buying credit default swaps in the CDO that would go up in price the more valueless it became a trade that would make more than $1 billion. Worse, Paulson had identified some of the dud sub-prime mortgages that he wanted Tourre to put into the CDO. If the SEC case is true, this was a scam nothing more, nothing less.

Tourre could see what was coming. In one email in January 2007 he wrote: “More and more leverage in the system. The whole building is about to collapse anytime now only potential survivor, the fabulous Fab[rice Tourre] . . . standing in the middle of all these complex highly leveraged exotic trades he created without necessarily understanding all of the implications of those monstrosities”. Fabulous Fab, like his boss, will not be feeling very fab today.

(Editor’s Note: I can’t wait to see THAT movie!)

The cases not only have a lot in common using financial complexity allegedly to deceive and then using so-called independent experts to validate the deception (lawyers, accountants, credit rating agencies, “portfolio selection agents,” etc., etc.) but they also show how interconnected the financial system is. In Iceland Citigroup and Deutsche Bank covered the margin calls of distressed Icelandic business borrowers, deepening the crisis. Lehman uses the lightly regulated London markets and two independent British experts to validate that their “Repo 105s” were “genuine” trades and not their own in-house liability. The American authorities pursued a Swiss bank over aiding and abetting US nationals to evade tax.

Bankers will complain these cases all involve one or two misguided individuals, but that most banking is above board and was just the victim of irrational exuberance, misguided belief in free market economics and faulty risk management techniques. Obviously that is true but, sadly, there is much more to the crisis. Andrew Haldane, executive director of the Bank of England, highlights the remarkable reduction in the risk weighting of bank assets between 1997 and 2007.

Put simply, Europe’s and the US’s large banks exploited the weak international agreement on bank capital requirements in the so-called Basel agreement in 2004 to reclassify the risk of their loans and trading instruments. They did not just reduce the risk by 5 or 10%.

Breathtakingly, they claimed their new risk management techniques were so wonderful that the riskiness of their assets was up to half of what it had been despite property and share prices cresting to new all-time highs.

Brutally, the banks knowingly gamed the system to grow their balance sheets ever faster and with even less capital underpinning them in the full knowledge that everything rested on the bogus claim that their lending was now much less risky. That was not all they were doing. As Michael Lewis describes in The Big Short, credit default swaps had been deliberately created as an asset class by the big investment banks to allow hedge funds to speculate against collateralised debt obligations.

The banks were gaming the regulators and investors alike and they knew full well what they were doing. Simon Johnson’s 13 Bankers shows how the major American banks deployed vast political lobbying power and money to create the relaxed regulatory environment in which all this could take place. In Britain no money changed hands. Gordon Brown offered light-touch regulation for free egged on by the Tories, who wanted to go further.

This was the context in which Goldman’s Fabulous Fab created the disputed CDOs, Sean FitzPatrick allegedly moved loans between banks and Lehman created its Repo 105s along with the entire “debt mule” structure revealed this weekend of inter-related companies to shuffle debt around its empire. London and New York had become the centre of an international financial system in which the purpose of banking became making money from money and where the complexity of the “innovations” allowed extensive fraud and deception.

Now it has all collapsed, to be bailed out by western taxpayers.

The banks are resisting reform and want to cling on to the business practices and business model that has so appallingly failed.

The politicians tread carefully, only proposing what the bankers say is congruent with their definition of what banking should be. Labour and Tories alike are united in opposing improved EU regulation of hedge funds, buying the propaganda those operations had nothing to do with the crisis. Perhaps Paulson’s trades at Goldman, and the hedge funds’ appetite for speculating in credit default swaps, may disabuse them.

It is time to reframe the question. Banks and financial institutions should do what economy and society want them to do: support enterprise, direct credit to where it is needed and be part of the system that generates investment and innovation.

Andrew Haldane and the governor of the Bank of England are right. We need to break up our banks, limit their capacity to speculate and bring them back to earth.

Britain should also launch an official investigation into what went wrong–and hand the findings to the Serious Fraud Office. This needs to become this election campaign’s number one issue not one which either a compromised Labour party or a temporising Conservative party will relish. The Lib Dems, the fiercest critics of the banks, have begun to get very lucky.

Crisis timetable

(Editor’s Note: This is a bizarre timetable given that banks have been conducting business outside of any ethics for decades. A recently uncovered story indicates that Wells Fargo cut a deal with Pancho Villa, one of America’s famous outlaws, in the early 1900s.)

• September 2007: Funding problems at Northern Rock triggers the first run on a British bank. It is nationalised in February 2008.
• April 2008: Bear Stern faces bankruptcy after a run on the company wipes out cash reserves in less than two days. Backed by the Federal Reserve, JPMorgan buys up shares at far below market value.
• September 2008: Lehman Brothers files for bankruptcy protection, becoming the first major bank to collapse since the start of the credit crisis.
• December 2008: Bernard Madoff arrested for operating the largest Ponzi scheme in history.
• January 2009: The Bank of England launches £200bn quantitative easing.
• March 2010: Former chairman of Anglo Irish bank Sean Fitzpatrick is arrested in Dublin after failing to disclose details of loans worth millions from the bank.
• April 2010: Northern Rock former directors, David Baker and Richard Barclay, are fined £504,000 and £140,000 for deliberately misleading analysts prior to nationalisation.
• April 2010: The US Securities and Exchange Commission accuses Goldman Sachs of “defrauding investors by misstating and omitting key facts”.

SEC Charges Goldman Sachs with Fraud
April 16th, 2010

The Securities and Exchange Commission (SEC) has filed a civil complaint against Goldman Sachs alleging that the financial giant worked with one of its key clients to create collateralized debt obligations (CDOs) consisting of subprime mortgage-backed securities. Goldman Sachs then sold the CDOs to investors knowing that the client was betting heavily against the very same product.

The SEC’s complaint says that Goldman Sachs vice-president Fabrice Tourre, who was personally charged in the complaint, put the plan into operation in 2007, bragging in an email to a friend that he was “the fabulous Fab standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!” Fabrice Tourre has since been promoted to executive director of Goldman Sachs International in London. Mr. Tourre also has a profile on LinkedIn.

John Paulson, the hedge fund manager of Paulson & Co. was involved in choosing which securities would be part of the portfolio, according to the SEC’s complaint, but neither he nor Paulson & Co. have been charged with any crime. The SEC also alleged that Paulson took a short position against its ABACUS 2007-AC1 CDO in a bet that its value would fall spectacularly. Here is Paulson & Co.’s response to the SEC’s civil complaint.

More than $1 billion was lost by ABN Amro and IKB Deutsche Industriebank AG, two of the European banks that bought these toxic securities. According to the report in Yahoo News, John Paulson’s hedge fund ended up with the profits from those two banks’ losses.

Informed readers know that Goldman Sachs, which earned a staggering $4.79 billion in 4th quarter 2009, was one of the top recipients of corporate welfare at the largesse of taxpayers through the generosity of the Bush and Obama administrations. Rolling Stone writer Matt Taibbi, in his 2009 expose of Goldman Sachs, refers to the firm as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

And derivatives expert and Huffington Post blogger Janet Tavakoli, who also is the founder of Tavakoli Structured Finance, accuses Goldman Sachs of “malicious mischief” and of creating “bad securities”. Further, “the SEC itself has shirked its responsibilities in these matters for years” she said, adding that the SEC’s “hands have been forced by public voices” rather than its regulatory mandate to protect investors.

Read more on Yahoo and MSN. You can also read the SEC’s complaint against Goldman Sachs here.

This article was also published in Examiner.com by Monique Bryher.

SEC’s Goldman charges may be just the beginning

By Greg Gordon
McClatchy Newspapers

WASHINGTON — Goldman Sachs, whose tactics exiting the collapsing subprime mortgage market have been under government scrutiny for months, now faces federal fraud charges that it duped investors into losing $1 billion on a rigged offshore deal pegged to dicey home loans.

The suit, brought Friday by the Securities and Exchange Commission, accuses Goldman and one of its vice presidents, 31-year-old Fabrice Tourre, of allowing a Wall Street hedge fund to secretly select many of the securities in the deal.

The hedge fund, Paulson & Co., then bet that those subprime mortgage securities would fail. When they did, Paulson made a $1 billion profit and investors lost more than $1 billion, nearly all their money, the complaint charges.

In an e-mail to a friend in January 2007, the complaint says, Tourre remarked that, “The whole building is about to collapse anytime now” — an apparent allusion to a plunge in the housing market that would depress the value of the mortgage securities.

The case suggests that a reinvigorated SEC, after a long lull, is pressing to hold Wall Street accountable for its role in the worst financial crisis since the Great Depression. People familiar with the SEC investigation of Goldman said it could expand, and a special Senate investigations panel is preparing to hold a hearing that will put Goldman under yet another magnifying glass.

Elizabeth Nowicki, a former SEC attorney who’s a visiting law professor at Boston University, called the SEC’s fraud suit “a political case as much as it is a case that they needed to bring to stop this sort of favoritism.”

“The SEC wanted to convey the message that no, they’re not sitting back on their heels,” she said. “This is going after Goldman Sachs. You can’t really go after anybody bigger than that . . . . The SEC has the stomach to follow this out, absolutely, and they’ve got a bigger incentive now that they are clearly perceived as shamed and disempowered.”

It’s still unclear whether Goldman also could face legal exposure for failing to disclose to investors in 2006 and 2007 that it had secretly bet that the housing market would collapse when it sold off more than $40 billion in securities backed by subprime mortgages. McClatchy Newspapers described those dealings in a series of articles in November and December 2009, including Goldman’s role in betting on a housing downtown in at least a dozen offshore deals that it marketed.

The company, in a terse statement, denounced the charges as “completely unfounded in law and fact,” and vowed to “vigorously contest them and defend the firm and its reputation.”

Underscoring Goldman’s stature as the world’s most prestigious investment bank, the enforcement action triggered a 126-point drop in the Dow Jones index on Wall Street. Shares of Goldman led the way, plummeting nearly 13 percent.

After the market closed, Goldman issued a second statement, saying that it lost $90 million on the transaction and that all of the involved parties were “sophisticated” investors that were well aware of the risks.

Goldman said the largest investor, ACA Capital Management, selected the securities “after a series discussions, including with Paulson & Co.” Goldman called the exchange “entirely typical.”

Sylvain Raynes, a New York expert in structured securities of the type described in the SEC charges, said the stakes are huge for Goldman.

“To lose its reputation,” he said, “Goldman does not need to be found guilty many times. They only need one instance.”

Besides naming the company as a defendant, the civil complaint accuses Tourre of concealing Paulson’s role from investors in a synthetic securities deal known as ABACUS, 2007-AC1 — one in which investors didn’t actually buy any securities.

Instead, they effectively bet that a specified bundle of home loans to marginally qualified borrowers would perform well, while Paulson took “short” positions, meaning it bet that those bonds would founder.

Paulson profited grandly from the nation’s economic collapse, taking in a total of $3.7 billion from its bets. The SEC complaint says the firm paid Goldman $15 million to assemble the deal, which Tourre was principally responsible for structuring.

The marketing materials for the investment, known as a collateralized debt obligation, told investors that ACA Management LLC, an independent third party, selected the mortgage-backed securities. The Paulson firm wasn’t mentioned.

“The product was new and complex, but the deception and conflicts are old and simple,” SEC enforcement chief Robert Khuzami said in a statement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”

The deal, one of about two dozen similar bundles in the ABACUS series, closed on April 26, 2007. Within six months, 83 percent of the mortgage-backed securities in the bundle had been downgraded and 27 percent were placed on negative watch by Wall Street ratings agencies, the complaint says.

By the following Jan. 29, it says, 99 percent of the portfolio had been downgraded, costing investors more than $1 billion.

Khuzami said that the Paulson firm, which isn’t affiliated with former Treasury Secretary Henry Paulson, wasn’t charged because it didn’t mislead investors.

However, the complaint charges that Goldman and Tourre “knew that it would be difficult, if not impossible,” to find investors for a synthetic CDO if they disclosed that a short player, such as Paulson, had a significant role in selecting the securities. Thus, they sought a third party for that role and approached ACA, calling it “important that we can use ACA’s branding” in an internal e-mail.

The complaint quoted Tourre, then 28, as saying in a Jan. 27, 2007 e-mail to a friend that was written in French and English: “More and more leverage in the system, The whole building is about to collapse anytime now . . . . Only potential survivor, the fabulous Fab(rice Tourre) . . . standing in the middle of all of these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities (sic)!!!”

A Feb. 11, 2007 e-mail to Tourre from the unidentified head of Goldman’s structured product correlation trading desk said, “the cdo biz is dead we don’t have a lot of time left,” according to the complaint.

Paulson said in a statement that, while it bought credit protection from Goldman via the ABACUS deals, “We were not involved in the marketing of any ABACUS products.”

It said that ACA “had sole authority over the selection” of all securities in the deal, noting that two Wall Street ratings agencies — Moody’s Investors Service and Standard & Poor’s — gave them Triple A grades, the highest investment rating.

Both Moody’s and S&P have suffered tremendous damage to their reputations as a result of issuing favorable ratings to pools of U.S. mortgages that turned out to be junk.

The SEC said the only other investor in the ABACUS deal, IKB, a commercial bank in Dusseldorf, Germany, lost nearly all of the $150 million it invested. Goldman said the largest investor, ACA Capital Management, put up $951 million. ACA lost nearly all the money.

Friday’s charges were the first to be filed by the SEC’s Structured and New Products Unit, formed to pursue abuses in highly sophisticated deals.

Many of these deals are sliced according to risk, with investors who take the greatest risk receiving the highest yield. In deals that were partially or entirely synthetic, Goldman or some of its clients would profit if the securities soured.

Gary Kopff, an expert in mortgage securities who’s studied Goldman’s role in betting against investors in deals it marketed though the Cayman Islands, said that, “They manifest, in my opinion, the same misconduct that the SEC asserts occurred in the ABACUS deal.”

Goldman created a structured product correlation trading desk in late 2004 or early 2005. A memo describing the ABACUS 2007-AC1 transaction to the company’s Mortgage Capital Committee on March 12, 2007, said that the “ability to structure and execute complicated transactions to meet multiple clients’ needs and objectives is key for our franchise,” the SEC complaint says.

Executing the deal “and others like it helps position Goldman to compete more aggressively in the growing market for synthetics written on structured products,” the e-mail said.

According to the complaint, Paulson came to believe that the underlying securities in the ABACUS 2007-AC1 deal “would become worthless.”

In late 2006 and early 2007, it charges, Paulson identified more than 100 mortgage bonds that it expected to collapse, favoring those backed by loans to borrowers with low credit scores, adjustable rate mortgages and located in overheated real estate markets such as Arizona, California, Florida and Nevada.

In early January, Tourre forwarded a list of 123 mortgage-backed bonds under the heading “Paulson Portfolio,” leading to negotiations among Paulson, Goldman and ACA over the final portfolio, which included a sizable number of those selected by Paulson.

Read more: Read More . . .

The letter to the FBI (way down there) comes from a group digging into the foreclosure crises, all of whom are finding absolute non-cooperation by lenders, no matter what the background, ethnic group, income level, hair color, married or single, kids or sans kids, sexual preference, West Coast or East Coast denizen, etc.

It doesn’t matter whether you have a job or not — you either make too much for a loan modification or too little or it’s stated income and lenders will discount a percentage (as though a “real” job were more secure during these days of massive layoffs).

A portion of a friend’s income is through rental of two rooms; Wachovia decided they wouldn’t count all of it because rental income is not stable. Really? Her renters have been in her home for many years, the rent is reasonable, they all get along well. Where might they go?

Americans across the board are getting shafted in the current drill being exercised by mortgage lenders.

It is a fascinating time: In my 60+ years, I’ve never seen equal prejudice . . . There’s generally a “selection” process relating to skin color, height, race, income level, drug use . . . or some guy whose wife hates him decided he hates all women who resemble her. When I first moved to Marin County, California, it was reserved for the car you drive, i.e. foreign vs. domestic (domestic was declasse).

Mortgage companies have managed to level the playing field across this country; it doesn’t matter who you are, how tall you are, what color your eyes are, they are NOT going to cooperate. As every cloud has a silver lining, so does this one: We can all finally acknowledge that we ARE in the same boat; if we work together we can beat them back; perhaps this is the lesson here.

It IS fascinating!

The group I’m working with have noticed that Wells Fargo bundled and sold defaulted loans to HSBC. Wells Fargo and HSBC have agreements on a commercial level: Wells Fargo HSBC Trade Bank. They are in bed together:

The Wells Fargo HSBC Trade Bank is the only nationally chartered bank in the U.S. exclusively devoted to international trade . . . (per PR Newswire)

HSBC is not owned out of China, as many seem to think (due to its original name of HongKong Shanghai Bank of China; that was started by a Scotsman and had something to do with opium wars). HSBC is an English bank and “HSBC” has been all too frequently in the same paragraph as the words “money laundering”:

• Reuters (a reputable media company) reported, on February 17, 2010, that HSBC is accused of assisting in money laundering;
• HSBC is being questioned in Ireland in connection with Bernard (Bernie) Madoff schemes (and for those of you residing in Ireland reading this, please take into consideration that Wells Fargo is trying to open banks in Ireland . . . trust me, you DO NOT want that bank in Ireland;
• HSBC is accusing an employee of stealing client data and selling it to French authorities (from the “Office of Inadequate Security” . . . don’t you love the internet?);
• HSBC, Europe’s largest banking institution “created” dummy corporations to avoid one billion dollars offshore tax evasion . . . which is considered by the FBI to be Britain’s longest running organized criminal conspiracy and corruption case. FBI Interpol and Scotland Yard are investigating this one!;
• The chairman of HSBC is implicated in the above-mentioned “major criminal conspiracy case.”

When the City of Baltimore sued Wells Fargo Bank in 2009, HSBC was mentioned along with them in various news stories.

March 14, 2009, L.A. Times, E. Scott Reckard
The NAACP sued subsidiaries of two major banks Friday for allegedly steering African American borrowers unfairly into costly subprime mortgages. The suits — against Wells Fargo Bank and Wells Fargo Home Mortgage Inc., owned by Wells Fargo & Co., and against HSBC Mortgage Corp. (USA) and HSBC Bank USA, owned by HSBC Holdings — arrive at a time when the housing crisis and soaring unemployment already are causing disproportionate harm in black neighborhoods, leaders of the rights group said.

How does any of this affect you? Check the sales pattern of your home loan (if you can find it).

If you have a Wells Fargo loan, we can almost guarantee that somewhere along the line it was sold to HSBC. When I asked Wells Fargo about the location of my note (which WAS sold to HSBC per the County Recorder in mid-2009 even though Wells Fargo denied that transfer), Wells “assured” me that they are the holders of my note. IF they are, it would only be because of questions I am asking about HSBC and their “sales pattern.”

The FBI may be our best hope. Apparently, they bow to no one. God Bless ‘em. And if you were passed through HSBC, I think it’s worth contacting Scotland Yard. (Oh, God, I’m starting to sound like group members Gregory and Kraig . . . but our group has learned a LOT from them and we have saved 26 homes to date! — well, some are pending, but they are not gone yet).

So, if there is a mortgage broker or financier out there, woudl you kindly inform us of the pattern? Banks lend on the homes, bundle and sell them at discount to a lender that bundles and sells at discount to a lender . . .

Who takes the hit for the loss when they are sold at discount? My guess is that it gets back to taxpayer dollars.

If you are in the midst of dealing with these duplicitous lenders, try contacting the FBI with the following, which is from one of my committee members (the full PDFs of this will follow in a week or so). You have absolutely NOTHING to lose by calling their cards, and given that many of us have 10-12 pages of notes about their mistakes, lies in court, and incompetencies, you stand to win; sadly, they do not know what they are doing and they WILL be the demise of America if left unchecked. So check them:

Mortgage Company Name
Address
Your Property Address
Account Number

NOTICE OF FRAUD AND INTENT TO LITIGATE

This is Constructive Notice to you that I have discovered extensive fraud in regard to the mortgage and transactions associated with it on certain real property as noted below. It has come to my attention that you are involved in selling my promissory note without my knowledge, to finance the alleged loan. I have also discovered that COUNTERFEITING and CONSPIRACY TO DEFRAUD were committed during and since my real estate settlement, during the purchase of the above mentioned property; documented fraud has occurred.

This is your Constructive Notice that evidence in this matter will be personally delivered to the FBI and SECRET SERVICE, for investigation and prosecution, resulting from violations of Federal Law including, but not limited to, COUNTERFEITING and CONSPIRACY TO DEFRAUD if you refuse to accomodate. Information, including your identity, and what appears to be your participation in these violations of Federal Law, will be provided to additional Federal Agencies, and local authorities, for investigation and prosecution as well. Whether complaints are filed is your decision. It is based on your response to this serious notice.

If you were not previously aware of the above mentioned fraudulent and criminal activity, and may be an innocent party in this matter, I would urge your utmost cooperation with the notice demands as well as ceasing all activities relating to the ongoing fraudulent action. If, however, you would choose to move forward in any manner and participate in any way in the attempt to initiate foreclosure action at any time, you will demonstrate your complicity and willingness to be a party to the COUNTERFEITING and CONSPIRACY TO DEFRAUD. You have been noticed and will become subject to potential criminal prosecution and civil litigation for varying damages, if you fail to meet each demand.

You have hereby been lawfully noticed of this fraud and your involvement, whether knowingly or unknowingly, and you therefore may make no future claim of a lack of knowledge of these criminal activities, and your participation therein, which could absolve you of liability or culpability. If ignored, it is my intent to pursue any and all legal remedies against any and all participants regarding these fraudulent acts as necessary. The bonding companies of those involved will be notified of claims regarding any civil matters. Conduct yourself accordingly.

TAKE NOTICE

This is but one part of a substantial nationwide investigation, by law enforcement, of the mortgage industry and the complicit fraud therein. This is a very real and serious matter that is being, and will be, pursued with all those who are identified as being complicit in any fraud being prosecuted to the fullest extent of the law and civil action taken to recover varying damages as necessary.

In order to avoid preventable actions taken against you, you must comply with the following and provide evidence of the same to me within thirty (30) days:

1. Provide a full “Satisfaction of Mortgage”, filed with the Recorder of Deeds.

2. File a full re-conveyance of the property with the Recorder of Deeds, conveying full rights and title.

3. Release any and all liens in all public records.

4. Refund all profits associated in full.

If you refuse to cease all further pretense that you lawfully hold a claim to my property, you will be charged, investigated and convicted of each of the aforementioned crimes committed. Immediately after your refusal to cease is confirmed, complaints will be filed with the FBI, SECRET SERVICE, the UNITED STATES DISTRICT COURT and the CRIMINAL INVESTIGATION DIVISION of the INTERNAL REVENUE SERVICE.

It is in your best interest at this juncture to cease all forms of criminal activity and to accommodate immediately. If you for any reason do not complete processing the above demands, all complaints will be filed immediately, as warned. Prior to all litigation, your counsel must provide evidence first of holding a license to practice law, issued by the Secretary of State where the property is located.

Thank you very much for your prompt, righteous response and resolution of this urgent matter.

Sincerely,

I’m equally fascinated by how desperate these lenders are? Is money truly so important? The Bible has it that “the LOVE of money is the root of all evil” . . . money itself is not. It’s why you want it and what you do with it.

I cannot help but feel sorry for the trap these major lenders are in, and I can guarantee you that my life, for one, has been far more interesting and informative than anyone who lives only for the Almightly Dollar.

Reading today’s news brings home the fact that few of us know much about the history of the world. Many of us are rightfully upset, but Robber Barons ARE the people who develop all countries while amassing fortunes at the expense of others under the guise of conquest, development, “you need this or that.” Think about all that you have in your home that you absolutely do NOT need at all for any reason. If you never saw this or that widget, it would not matter.

Think about all the foodstuffs that we consume that are actually harmful; food and drug industries are rife with Robber Barons . . . and with the help of government. Think about cigarettes; beyond a shadow of a doubt, they main and kill. Executives and shareholders of Philip Morris, R.J. Reynolds, etc., ARE robber barons. They are making fortunes while individuals die (or, perhaps worse, live and drain taxdollars to help them stay alive — while continuing to smoke).

Our friends, The Robber Barons (aka Super Thieves) have been with us since the dawn of time. As soon as someone decides they want something you have, and the second the desire outstrips their ethics, the game starts. During extensive historical research for a maritime site, I’ve repeatedly been appalled at the machinations of man as I read about who took over what nation and under what circumstances.

Don’t you find it appalling that the British, French, Spanish, Dutch, et. al. sat around divving up countries willy nilly in order to secure spices for England or gold for Queen Isabella of Spain or diamonds for Holland? These countries were already inhabited and some quite developed when Europeans arrived, claimed to have “discovered the land,” and proceeded to invade, rape, pillage, rob, burn . . . They want what they want and they take it.

It seems the only reason so many more of us are aware of international wheeling and dealing is because of the Internet and cellphones; the people have a voice like never before. Little can be hidden.

While government representatives, for example, insist there is no strife in their country, a student or tourist with a cellphone snaps that telling shot . . . the one that shows a different story; one that shows the truth to the world. (Left is a robbery of a jewelry store captured on someone’s cell phone — this was found on the internet!)

This, while I agree, I find this article from the Sovereign Society newsletter quite narrow in scope:

Lies and irresponsibility have become the hallmark of both Wall Street and now Washington are threatening the life savings of individuals.

Noted author and economic analyst John Pugsley was quoted as saying, “Hard working Americans, trying to do everything right, are now at the mercy of the fallout from these lies. And there are three in particular that pose devastating threats. But investors today can protect themselves if they quickly take the appropriate steps…”

For all of us to decide, perhaps, is how much is enough? How much is too much? Do we need all of these developments at the cost of everything else on earth?

In the event you have note wrestled with that one (or have without a satisfactory answer), you might want to see the movie “Avatar,” which addresses some of these issues.

The upside and downside of being out of work for most of 2009 has been I’ve had time to look at our system of government and banking in a depth never before done by me. It’s depressing. The “powers that be” have gotten away with so much because families have had their heads down working hard to make a living. We have paid scant attention to the corruption stemming from Wall Street and Washington, D.C.

America IS a great country. Why has it come to this levels of abandonment of principles?

This was just sent to me. It IS time to take back our country and level the playing field.

For too long we have been too complacent about the workings of Congress. Many citizens had/have no idea that members of Congress can retire with the same pay after only one term, that they don’t pay into Social Security, that they specifically exempt themselves from many of the laws they pass (such as being exempt from any fear of prosecution for sexual harassment) while ordinary citizens must live under those laws.

The latest attempt in Congress is to exempt themselves from the Healthcare Reform that is being considered . . . in all of its forms.

Somehow, that doesn’t seem logical. We do not have an elite that is above the law. It does not matter if they are Democrat, Republican, Independent or whatever. The self-serving must stop. This is a good way to do that. It is an idea whose time has come.

Ask each person on your eMail list to contact a minimum of twenty people on their address list, in turn ask each of those to do likewise.

In three days, most people in The United States of America will have the message. This is one proposal that really should be passed around.

Proposed 28th Amendment to the United States Constitution:

“Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States.”

Dr. Seuss’ Did I Ever Tell You How Lucky You Are? (Classic Seuss)
A favorite economics lesson is from Dr. Seuss’ “Did I Ever Tell You How Lucky You Are?”

Oh, the jobs people work at! Out west, near Hawtch-Hawtch, there’s a Hawtch-Hawtcher Bee-Watcher. His job is to watch . . . to keep both his eyes on the lazy town bee. A bee that is watched will work harder, you see.

Well . . . he watched and he watched. But, in spite of his watch, that bee didn’t work any harder. Not mawtch.

So then somebody said, “Our old bee-watching man just isn’t bee-watching as hard as he can. He ought to be watched by another Hawtch-Hawtcher. The thing that we need is a Bee-Watcher-Watcher.”

WELL . . .The Bee-Watcher Watcher watched the Bee-Watcher. He didn’t watch well. So another Hawtch-Hawtcher had to come in as a Watch-Watcher-Watcher.

And today all the Hawtchers who live in Hawtch-Hawtch are watching on Watch-Watcher-Watchering-Watch, Watch-Watching the Watcher who’s watching that bee. You’re not a Hawtch-Hawtcher. You’re lucky you see.

Why are those at the heads of the investment banking businesses worldwide trying to convince us that this entire sink hole began only a year or so ago, when in fact the sink hole has been being positioned by those very actors, for decades. How and when did America become the “sloppy society?” The way our country is run is quite inelegant.

The following is from a variety of sources: “Treasury Inspector General for Tax Administration Recovery Act,” “Sovereign Society,” and a gentleman self-described as a “Disgruntled Republication.”

Federal workers owe more than $3B in back taxes
By STEPHEN OHLEMACHER (AP) – Dec 15, 2009

WASHINGTON — Federal workers owed the government more than $3 billion in back income taxes in 2008, just as federal tax revenues started to suffer from the recession.

More than 276,000 federal employees and retirees owed back income taxes as of Sept. 30, 2008, according to data from the Internal Revenue Service. The $3.04 billion owed was up from $2.7 billion owed by federal employees and retirees in 2007.

Among cabinet agencies, the Department of Housing and Urban Development had the highest delinquency rate, at just over 4 percent. The Treasury Department, which includes the IRS, had the lowest delinquency rate, at 0.98 percent.

Overall, the 9.7 million federal workers included in the data had a delinquency rate of about 2.9 percent.

“It’s not right for a few to shirk their obligations, and it’s especially offensive that these tax delinquencies come from federal employees and contractors,” said Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee.

The IRS doesn’t provide a comparable delinquency rate for income taxes paid by the public. The nation’s overall compliance rate, which includes taxes paid by small businesses and corporations, has hovered around 85 percent for decades, according to IRS statistics.

Most residents who owe back income taxes file returns but cannot pay the full amount at tax time, said IRS spokesman Anthony Burke. Others have their tax bills increased through audits and cannot pay the higher bill.

The statistics on federal employees do not include those who are on payment plans. The IRS doesn’t publicize the data, but makes it available upon request. The data was first reported by Washington radio station WTOP.

The recession has put a big dent in federal tax receipts. Individual income tax receipts for the fiscal year that ended in September were down about 20 percent from the year before.

I recently discovered that the servicer of my mortgage made TWENTY-TWO mistakes (that I know of) during 2009 with regard to my mortgage! That, of course, pushed me into wondering what in the hell is going on? . . . the IRS has trouble even with routine tasks. According to another IG report, the agency has a staggering 70 percent error rate in its processing of taxpayer identification numbers for individual taxpayers:

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its review of the IRS’s processing of applications for Individual Taxpayer Identification Numbers (ITINs). TIGTA reviewed a sample of ITIN applications and found that almost 70% contained significant errors and/or raised concerns that should have prevented the issuance of an ITIN. The IRS estimates that it has issued more than 14 million ITINs as of December 2008. ITINs are intended to provide tax identification numbers to resident and nonresident alien individuals who may have U.S. tax reporting or filing obligations but do not qualify for Social Security Numbers, which generally are only issued to U.S. citizens and individuals legally admitted to the U.S. . . . ”The number of individual income tax returns filed using ITINs and reporting wage income has increased by 247 percent from 2001 to 2008,” commented J. Russell George, the Treasury Inspector General for Tax Administration. “If the IRS continues to issue ITINs without proper verification, the risk of fraudulently filed returns – along with fraudulently claimed refunds – will continue to rise,” added Inspector General George.

Everything by Dr. Seuss
Just think how much fun it will be when the IRS is in charge of determining those of us who should get fined or jailed for noncompliance with government-run healthcare! No wonder so many taxpayers put a flat tax or national sales tax on their Christmas lists.

Perhaps Dr. Seuss is our only hope . . . We’ve added a link to a collection of his books, including Dr. Geisel Goes Green (warnings against mindless progress), The Lorax, Mr. Brown Can Moo!, One Fish Two Fish Red Fish and others. The Economics of Dr. Seuss