Thursday, October 14, 2010

Hypocrite of the Week: Sheila C. Bair

While I am still waiting for the media relations department at the FDIC to tell me if allowing Alan Blinder and crew to sneak around, and in between, regs to obtain FDIC insurance for multi-billionaires, creates moral hazard, let's take a look at the latest pronouncement from Bair.

NYT quotes Bair about foreclosuregate:

“We waited and waited and waited for wide-scale loan modifications,” said Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, one of the first government officials to call on the industry to take action. “They never owned up to all the problems leading to the mortgage crisis. They have always downplayed it.”
The problem with this?

Sheila Bair's FDIC is running one of the biggest foreclosuregate banks.

Bloomberg reports:
 What were banking regulators doing while some of the biggest U.S. lenders routinely filed false foreclosure documents in local courthouses around the country? In the case of IndyMac Federal Bank, it turns out the Federal Deposit Insurance Corp. was running the joint.

This may help explain why the mortgage-servicing industry got away with such misbehavior for so long. The government, in one form or another, was doing it, too.

The facts are there for anyone to see in the records of a circuit-court lawsuit against Israel and Neena Machado, a West Palm Beach, Florida, couple who last year beat back IndyMac’s attempts to foreclose on their home mortgage. They even won a judgment ordering IndyMac to pay $38,117 in legal fees.

IndyMac sued the Machados in November 2008, four months after the government closed its predecessor, Pasadena, California-based IndyMac Bank, which had $32 billion in assets when it was seized. The FDIC formed IndyMac Federal in July 2008 as the successor to the failed bank, and continued operating it in conservatorship before selling it in March 2009.

Among the sworn statements IndyMac filed with the court was a December 2008 affidavit by an IndyMac vice president, Erica Johnson-Seck, who said she had personal knowledge of the amount of money the Machados owed on the mortgage. That wasn’t true, she later testified in a deposition...“There’s a lie in the affidavit,” the judge in the case, Meenu Sasser, said at a September 2009 court hearing, where she dismissed IndyMac’s complaint. “It’s a false affidavit.”
In testimony, Johnson-Seck said she and her team of seven others sign 6,000 documents a week or about 24,000 a month without reading all of them.

Bottom line: The FDIC used robo-signers for the banks they controlled. For Bair to bitch about other banks is over the top. She's more of a damn fraud then the phony documents her banks put before the courts.

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