Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?

[marmar]

from YES! Magazine:



Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?
With risky behavior by big finance again threatening economic stability, how can we get things right this time?
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by Ellen Brown
posted Oct 15, 2010


Looming losses from the mortgage scandal dubbed “foreclosuregate” may qualify as the sort of systemic risk that, under the new financial reform bill, warrants the breakup of the too-big-to-fail banks. The Kanjorski amendment allows federal regulators to pre-emptively break up large financial institutions that—for any reason—pose a threat to U.S. financial or economic stability.

Although downplayed by most media accounts and popular financial analysts, crippling bank losses from foreclosure flaws appear to be imminent and unavoidable. The defects prompting the “RoboSigning Scandal” are not mere technicalities but are inherent to the securitization process. They cannot be cured. This deep-seated fraud is already explicitly outlined in publicly available lawsuits.

There is, however, no need to panic, no need for TARP II, and no need for legislation to further conceal the fraud and push the inevitable failure of the too-big-to-fail banks into the future.

Federal regulators now have the tools to take control and set things right. The Wall Street giants escaped the Volcker Rule, which would have limited their size, and the Brown-Kaufman amendment, which would have broken up the largest six banks outright; but the financial reform bill has us covered. The Kanjorski amendment—which slipped past lobbyists largely unnoticed—allows federal regulators to preemptively break up large financial institutions that pose a threat to U.S. financial or economic stability. ..........(more)

The complete piece is at: http://www.yesmagazine.org/new-economy/foreclosuregate-time-to-break-up-the-too-big-to-fails

[ixion]

1. yep, break them up, and make it so that they cannot reconstitute

and destroy our system once again.

[xchrom]

2. recommend

[dkf]

3. If the problem stems from the MERS system then that must be fixed in itself

Because more banks than the big ones would be affected.

But if the docs themselves are lost then banks should be responsible for it's own shoddy practices. Also if investment banks were packaging and selling mortgages with assertions on underwriting that were untrue then they need to buy those back and take the consequences.

[TexasObserver]

4. They should have been forced into liquidation two years ago.

Twenty five years ago, when small banks and S&Ls all over the country were forced into liquidation, the Feds turned the good assets of such liquidated entities over to the big banks. In 2008, it was those big banks that should have been allowed to fail, and the sound local banks that should have been rewarded.

But as the final insult of the Bush Reign of Error, the big banks were bailed out with federal money, and the perps who perpetrated a fraud in the trillions were allowed to remain in place. These same thieves are now responsible for Phase II of their criminal activities. Not only did they not use the money to help the problem of foreclosures, they didn't even follow the legal procedures required to accomplish foreclosures.

If the president had come into office with a plan to hold these criminals responsible, instead of a plan to look the other way and pretend all was well, we might not have this current mess.

[RedCloud]

5. Smash them into a thousand pieces to shoot into a thousand galaxies.

Lest they mingle again.

There should be lots more credit unions, etc.