Subject: Fwd: Deutsche v. BofA Is Reason Sudden TARP Payment & Bill That Bans Future Bank Bailouts

—–Original Message—–
From: June Reyno [mailto:june.reyno@gmail.com]
Sent: Friday, December 04, 2009 4:59 PM
To: Carrie Luft; ABBY CLARKE
Subject: Fwd: Deutsche v. BofA Is Reason Sudden TARP Payment & Bill That Bans Future Bank Bailouts
———- Forwarded message ———-
From: sal danna
Date: Thu, Dec 3, 2009 at 8:09 PM
Subject: Deutsche v. BofA Is Reason Sudden TARP Payment & Bill That Bans Future Bank Bailouts
To: June Reyno
In the less than 10 days since Deutsche v. BofA and BNP v. BofA were filed on November 25, 2009, both BofA and Congress made moves to protect each other and hopefully the US Taxpayer.
When our government foolishly went along with the bailout of “Wall Street”, I don’t think any of them imagined the scope of the fraud involved or bothered to check if any of their new partners including BofA had any serious infectious diseases before they got into bed with them.
It appears that some in Congress discovered they were given a disease in its’ early stage which gives us hope that it can be treated quickly and effectively. First they confronted biggest disease ridden partner of them all, BofA and told them they knew about the disease and are not going to let it spread and allow the US Taxpayers to foot the bill to vaccinate the entire world. They probably told them either give us our TARP money back now and cancel the contract or we will quarantine all of you immediately.
Not wanting to be quarantined, BofA announced today that they were paying back all of the TARP money they received which will end any US ownership of the company. Within hours on that same day, Congress passed HR 3396, the Improving Financial Stability and Enhancing Prudential Regulation Act. The bill aims to hold financial industry and shareholders responsible for the cost of firms’ failures.
Some of the provisions include:
The bill imposes risk retention on all lenders. For the first time requires lenders to retain a portion of the risk they generate in order to provide real market discipline for underwriting decisions. New rules from the banking regulators and the SEC will require creditors to retain at least 5 percent of the credit risk associated with any loans that are transferred, sold or securitized.
Provides for Tough Restrictions on Assistance in Times of Crisis to Eliminate Government Bailouts.
The FDIC may extend Emergency Financial Stabilization loan guarantees to solvent banks and predominantly financial companies only in a liquidity crisis. This facility, which will only result in a government payout if a guaranteed loan defaults, will be funded by fees paid by financial companies that request guarantees. A similar facility managed by the FDIC actually generated positive net revenues for the government in the recent liquidity crisis. This authority sunsets on December 31, 2013, unless extended by Congress.
The Federal Reserve’s use of Section 13(3) authority will be subject to significant new restrictions. Use of this authority will require approval by two-thirds of the members of the Council and the consent of the Treasury Secretary after certification by the President that an emergency exists. This authority may not be used to provide assistance to individual companies, and Congress will be able to disapprove further use of the authority.
Provides for orderly dissolution of failing firms, ending “Too Big to Fail”:
The legislation provides for robust authority that will enable regulators to dissolve large, highly complex financial companies in an orderly and controlled manner, ensuring that shareholders and unsecured creditors, not taxpayers, bear the losses.
No firm will be “too big to fail” – when a firm enters the dissolution process, management responsible for the failure will be dismissed, parties that should bear losses – particularly shareholders and unsecured creditors – will do so, and the firm will cease as a going concern.
What does this all mean? It means that when the world does find out about the unprecedented fraud that occurred in the banking industry, the US Taxpayers will not be on the hook again to bail out what in the end may be the entire financial world. By forcing BofA to pay the TARP money back now and distance itself from BofA, if and when BofA gets exposed to substantial damages for their actions, they will be allowed to fail and no Taxpayer Bailout is going to help them.
What does this mean to those like Deutsche and BNP both of whom have already filed lawsuits against BofA which added together claim liability for Billions of Dollars? It means that if these foreign banks win on their claims, they can only collect from the assets of BofA and the US will not be bailing them out.
Regarding the assets of BofA, most of the loans that were supposed to be the basis for the collateral of the money fronted by foreign banks have already been sold in foreclosure and are out of the reach to these new Bona Fide purchasers. Any money they may have received from selling those homes could amount to possibly half of the original investment and probably spent on company bonuses, etc.
The problem might occur once again if the foreign banks can somehow prove that they were the actual note holders, they could then go after the US taxpayers directly for payment of the debt. The fact that someone stole the collateral does not in any way affect the debt on the Note. This is why “Produce the Note” is so important.
Salvatore B. D’Anna
On Sun, Nov 29, 2009 at 11:11 AM, sal danna wrote:
The investor banks are now beginning to discover that what they were told does not match reality. Trust does not hold the Notes, the Cash, or the Foreclosed Homes!! They are finally realizing what we have been saying for over 2 years now, that the party foreclosing does not own the note and now either do the Trusts!!
DEUTSCHE BANK, AG, Plaintiff, v. BANK OF AMERICA, N.A. Defendant
71. Moreover, between June 30, 2008 and August 4, 2009, BOA transferred over $1
billion to Colonial and other banks in numerous transfers of whole/round number amounts that bore no relation to any purchase of mortgages. Whole/round number transfers to purchase mortgages would be highly unusual because the aggregation of individual mortgages themselves would not typically be expected to result in whole/round number amounts.
72. Furthermore, the payments made by BOA to the Colonial IFA on a daily basis
bore no relationship to the value of the mortgages being purchased. On average, BOA, on
behalf of Ocala, would receive approximately $40-50 million of mortgages for purchase each
day. In order to pay for those mortgages, BOA was required to pay an amount equal to the face value of the mortgages to the Colonial IFA.
73. On some days, BOA failed to transmit the funds to the Colonial IFA necessary
to complete the purchase of those mortgages. For example, on February 27, 2009, BOA
transmitted only $8.8 million to Colonial despite the fact that BOA’s records indicated that
$54.5 million in mortgages were acquired from Colonial that day for the benefit of DB. By
failing to transmit payment for the mortgages, BOA prevented Ocala from perfecting the
security interests in those mortgages that was intended to serve as the primary collateral for DB’s investment. BOA nonetheless represented in daily reports to DB that the security
interests had been perfected by accounting for the mortgages as collateral securing DB’s
investment.
74. On other days, BOA transmitted far more money to the Colonial IFA than was
warranted to purchase the mortgages that BOA’s records indicate were acquired by BOA for the benefit of Ocala. For example, on May 29, 2009, BOA transmitted the large sum of $690 million to the Colonial IFA, despite the fact that BOA’s own records indicate that only $36.7 million in mortgages were acquired from Colonial that day for the benefit of Ocala. By
conducting such transfers, BOA permitted the funds invested by DB to be transferred out of
Ocala without obtaining mortgages in return.
82. In connection with its duties under the Custodial Agreement, BOA agreed to provide DB with a daily report of all such mortgage loans (the “BOA Loan Reports”), and began transmitting these reports to DB in September 2008. The BOA Loan Reports listed each mortgage loan held by BOA for the benefit of DB, and noted whether the loan was either still in the physical possession of BOA or out to a prospective third party purchaser pursuant to a BOA Bailee Letter. Having assumed this additional daily reporting obligation, BOA was required to perform it in a non-negligent manner.
83. In August 2009, after TBW collapsed, DB discovered that the BOA Loan
Reports were false. For example, the August 12, 2009 BOA Loan Report showed that there
was approximately $1,160,530,265 in mortgages securing DB’s investment. BOA’s own
internal information, however, shows that at least $470 million of these mortgages already had been delivered and sold to Freddie Mac at least two weeks prior to the date of the BOA Loan Report and so could not have constituted collateral securing DB’s investment. Further, on information and belief, as of August 12, 2009, there were virtually no mortgages held by BOA to secure DB’s investment.
84. This false reporting of the state of the collateral securing DB’s investment began
almost a year prior to TBW’s collapse. For example, on September 15, 2008, the date on
which BOA delivered the first BOA Loan Report, BOA represented that the amount of
mortgages securing DB’s investment was approximately $1,147,268,192. BOA’s own internal information, however, shows that only about half of these mortgages totaling about $538 million were either still on hand or had not been delivered and/or sold to Freddie Mac.
85. On information and belief, hundreds (and potentially all) of the BOA Loan Reports delivered by BOA to DB during the period between September 15, 2008 and August 4, 2009 were similarly false.
86. Had BOA properly reported the amount of mortgages securing DB’s investment,
DB would have known of the under-collateralization of its investment, and could have
prevented the loss of its investment.
88. In August 2009, however, after TBW and Colonial collapsed, DB discovered
that BOA did not have ownership, possession, or control of virtually any of the mortgages that were listed on the BOA Loan Reports.
89. BOA has been unable to produce the mortgages that it represented to DB as
being held by BOA on behalf of DB. Moreover, BOA has been unable to account for where
the mortgages are or even to establish that the mortgages were ever purchased by Ocala.
90. BOA’s inability to produce or account for the mortgages that were supposed to
be the collateral for DB’s investment stems from, among other things, BOA’s failure to keep records concerning the purchase and sale of mortgages on behalf of Ocala.
91. With respect to the purchase of mortgages, BOA failed to maintain the internal
documentation necessary to establish Ocala’s ownership of purchased mortgages. BOA
recently admitted to DB that it failed to maintain loan level detail with respect to the mortgages it purchased. As such, BOA has been unable to prove with specificity that it paid for any particular mortgage or that it was paid by third parties for particular mortgages.
92. BOA also failed to obtain documentation from third parties necessary to
establish Ocala’s purchase and ownership of mortgages. BOA failed to obtain letters from
Colonial confirming Colonial’s release of its security interest with respect to particular
mortgages for which BOA transmitted payment to Colonial.
93. BOA’s failure to obtain such documentation was particularly egregious because
BOA was fully aware that Colonial was TBW’s and/or Freddie Mac’s agent with respect to the sale of mortgages by Ocala to Freddie Mac. BOA, therefore, would have to transfer mortgages back to Colonial (as Freddie Mac’s agent) pursuant to a BOA Bailee Letter after having purchased the mortgages from Colonial (as TBW’s agent). The possibility existed that once BOA transferred the mortgages to Colonial, Colonial could assert ownership of the mortgages and refuse to either return the mortgages or remit payment received from Freddie Mac for the mortgages unless BOA could prove that Colonial’s security interest had been released. This made it even more critical that BOA document that it properly had taken the steps necessary to release Colonial’s security interest in the mortgages, and that Colonial had in fact released that interest.
94. On information and belief, Colonial, and/or the Federal Deposit Insurance
Corporation (“FDIC”) acting as receiver for Colonial, asserts that mortgages for which BOA
claimed to have paid Colonial, and in which BOA claimed to hold a security interest on behalf of DB, in fact, belonged to Colonial. Colonial, and/or the FDIC acting as receiver for Colonial, contend that BOA never remitted payment to Colonial as required in the Colonial Bailee Letters pursuant to which the mortgages had initially been transferred by Colonial to BOA.
95. BOA also failed to maintain proper documentation and to track mortgages over
which it had asserted control and that it subsequently released to prospective third-party
purchasers.
96. Pursuant to Section 8 of the Custodial Agreement, BOA as Custodian was
authorized to release mortgages to prospective third-party purchasers only if BOA
accompanied delivery of the mortgage with a BOA Bailee Letter to be executed by the
purchaser. BOA was further required to collect all transmittal letters executed by prospective third-party purchasers.
112. BOA has failed to provide DB with the vast majority of Borrowing Base
Condition certificates. The few certificates that BOA provided are clearly and demonstrably
false showing that DB’s investment was severely under-collateralized:
a. On May 20, 2009, BOA certified that it held mortgages worth $1,134,028,581 as DB Collateral. In reality, on May 20, 2009, BOA knew or should have known that it held or had a lien on approximately $547 million in mortgages as DB Collateral.
Liquidity Notes were adequately secured in accordance with the Ocala Agreements. If DB’s
investment was not so secured, then the facility would be in violation of the Borrowing Base
Condition, and this would trigger two important consequences: (1) the Secured Liquidity Notes would not be rolled over, but instead would become immediately due and payable, and/or (2) no new purchases of mortgages would be permitted, thus halting Ocala’s outlay of further cash, unless and until the Borrowing Base Condition was again satisfied.
112. BOA has failed to provide DB with the vast majority of Borrowing Base
Condition certificates. The few certificates that BOA provided are clearly and demonstrably
false showing that DB’s investment was severely under-collateralized:
a. On May 20, 2009, BOA certified that it held mortgages worth
$1,134,028,581 as DB Collateral. In reality, on May 20, 2009, BOA knew or should have
known that it held or had a lien on approximately $547 million in mortgages as DB Collateral.
b. On June 20, 2009, BOA certified that it held mortgages worth
$1,208,009,892 as DB Collateral. In reality, on June 20, 2009, BOA knew or should have
known that it held or had a lien on approximately $440 million in mortgages as DB Collateral.
c. On June 30, 2009, BOA certified that it held mortgages worth
$1,226,886,314 as DB Collateral. In reality, on June 30, 2009, BOA knew or should have
known that it held or had a lien on approximately $468 million in mortgages as DB Collateral.
d. On July 20, 2009, BOA certified that it held mortgages worth $1,216,398,908
as DB Collateral. In reality, on July 20, 2009, BOA knew or should have known that it held or
had a lien on approximately $476 million in mortgages as DB Collateral.
126. On information and belief, on August 6, 2009, BOA requested that Colonial
return all of the loans held by Colonial pursuant to the BOA Bailee Letters. The vast majority
of these loans had been out to Colonial on BOA Bailee Letters for more than 60 days, grossly
exceeding the fifteen-day limitation set forth in the BOA Bailee Letter.
127. On August 7, 2009, Colonial BancGroup disclosed that it was the target of a
criminal investigation by the U.S. Department of Justice relating to its mortgage lending unit
and related accounting irregularities, and that it might be placed under receivership.
128. On August 10, 2009, BOA as Indenture Trustee declared an indenture event of
default stating that the notes were due and payable because of TBW’s loss of approved seller status.
129. On August 14, 2009, Colonial was closed by the Alabama State Banking
Department, and the FDIC was named Receiver.
130. On August 20, 2009, the outstanding DB Secured Liquidity Notes in the amount
of $1,201,785,714 held by DB became immediately due and payable. Ocala has failed to pay
this amount.
131. On August 24, 2009, TBW filed for relief pursuant to Chapter 11 of the United
State Bankruptcy Code in the United States Bankruptcy Court for the Northern District of
Florida.
132. To date, BOA has failed to recover any DB Collateral and to pay the amounts
due to DB under the DB Secured Liquidity Notes.
Drew, on December 4th, 2009 at 3:26 pm Said:
That is great, I have forward this on to my attorney who gets it here in MN.
I have a question regarding the court of appeals. I am in a case in MN that I am going to be appealing and may need to post bond. I am spending every penny on the attorney, how or who will help to be a part in helping kick MERS to the curb? Any suggestions? MY case is cutting edge in MN and could have nationwide implications on limiting what MERS could do in judicial foreclosures. I have been fighting MERS/Wells for 4 years and I found that most of the time district judges don’t understand this area of cutting edge law. God Bless you Neil and the rest of you who post here. These ideas expressed in this blog do work.