THE BANKS ARE STEALING HOMES THEY DO NOT OWN! THE LAW STATES THAT ONLY REAL PARTY IN INTEREST - THE SECURITIZED TRUST, MOSTLY LIKELY NOW DISSOLVED BUT STILL IN CONTROL OF ITS ASSETS, CANNOT FORECLOSE EITHER!
IN THE CIRCUIT COURT OF THE __________________ JUDICIAL CIRCUIT, __________________ COUNTY, ILLINOISJP MORGAN CHASE BANK, NATIONAL )ASSOCIATION )Plaintiffs, ) )v. ) ) Case No. )Pro-Se Defendants ) )COUNTERCLAIM ) ) )Pro Se Counter-Plaintiffs ) ) v. ) )JP MORGAN CHASE BANK, NA )CHASE HOME FINANCE LLC ) DEMAND FOR JURY TRIALWASHINGTON MUTUAL BANK NA )Counter-Defendants ) OWNERS SUPPLEMENTAL EVIDENCE COMES NOW Defendants and Counter-claimants __________________, (collectively ―Owners‖), proceeding pro se hereby files Supplemental Evidence presenting to the Court pertinent information that has been discovered as a result of further investigation: THE CONSPIRACY 1. The matters raised by the Owners in their affirmative defenses and counterclaimscannot be viewed in a vacuum and need to be viewed in the context of what Chase and otherrelated Bank entities were doing, and are continuing to do, to this day. 2. Defendant and Counter-Plaintiff, __________________has conducted extensiveresearch into the anomalous events transpiring in our country and the world today, and has sought
to identify the underlying root cause in such a way that these events make sense. Her journeybegan in ignorance and naiveté, grew to incredulity, and ended with Truth. She seeks to exposethis Truth so that our great nation can begin to heal. For unless the problem can be identified, wewill be unable to find a solution. One thing is certain: a cancer is infecting our Nation and must beexcised now. This cancer has been present for decades as evidenced in attorney Ellen Brown‘s―Web of Debt‖ ―The 1890‘s were plagued by an economic depression that was nearly as severe as the Great Depression of the 1930s. The farmers lived like serfs to the bankers, having mortgaged their farms, their equipment, and sometimes even the seeds they needed for planting. They were charged so much by a railroad cartel for shipping their products to market that they could have more costs and debts than profits. The farmers were as ignorant as the Scarecrow of banking policies; while in the cities, unemployed factory workers were as frozen as the Tin Woodman from the lack of a free-flowing supply of money to ―oil‖ the wheels of industry. In the early 1890s, unemployment had reached 20 percent. The crime rate soared, families were torn apart, racial tensions boiled. The nation was in chaos. Radical party politics thrived.‖ 3. Like any investigator, one need simply ‗follow the money‘ and ask who benefitedfrom this crisis, who made off with Trillions and who is NOT being prosecuted, for then one willbe led directly to the culprits. Those culprits are Insiders at the privately-owned Federal Reserve,Wall Street, JP Morgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs (the―Conspirators‖) which are currently engaged in a systematic multi-faceted course of conduct, aConspiracy, in every state in these United States of America, and the world to bring about aneconomic collapse of the monetary system utilized by most of the countries in this world - a fiat-based monetary system which is a veritable ticking time bomb due to explode soon. Upon theinevitable collapse of this system, it is speculated that the Conspirators will unveil a Globalmonetary system which will allow them to perpetuate their scam of printing fake money andcharging interest on that fake money thereby having the power and control over the world - aposition they have covertly held for centuries. 4. Indisputable evidence has emerged from investigations by the SEC, FBI, FTC,FDIC and various other governmental agencies which expose the Conspirator‘s scheme resultingin the greatest shift of assets from the middle class to the wealthiest around the world. Although
these allegations may sound incredulous, the facts and events unfolding in our world fullycorroborate them. 5. The Conspirators, supposedly among the ―best and brightest‖ on Wall Street, theFederal Reserve and the five largest banks, are paid Millions of dollars for their superior intellect,but said Conspirators allege that not one of them had an inkling that an economic crisis wasbrewing, in direct contradiction to what others on Wall Street were saying. 6. According to Nomi Prins, former Goldman Sachs analyst who authored ―It Takesa Pillage‖, Rolling Stone Wall Street reporter Matt Taibbi, who authored ―Griftopia‖, andMichael Lewis who authored ―The Big Short‖, those on Wall Street who were not ―insiders‖absolutely knew that something was happening which prompted some to look deeper into thesale of Mortgage-Backed securities. They soon discovered that even though these securities wererated AAA, meaning they were low risk investments, they were, as revealed in Congressionalhearings, ―pieces of crap‖. Any rational person would ask why these highly respected firmswould sell AAA-rated ―pieces of crap‖? Herein lies a paradox. 7. In fact, many Wall Street ―outsiders‖ felt that a ‗house of cards‘ was intentionallybeing set up, which was validated in a CNBC documentary entitled ―House of Cards‖ whichcited the following quotation from an internal Wall Street email dated 12/15/2006: ―Let‟s hope we‟re all wealthy and retired by the time this house of cards falters.” 8. In the January 2011 Financial Crisis Inquiry Commission (―FCIC‖) Report - Pgxx- stated: ―In the years leading up to the crisis many financial institutions borrowed to the hilt, leaving them vulnerable to financial distress or ruin if the value of their investments declined even modestly. For example, as of 2007 the five major investment banks—Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley—were operating with extraordinarily thin capital. By one measure, their leverage ratios were as high as 40 to 1, meaning for every $40 in assets, there was only $1 in capital to cover losses. Less than a 3% drop in asset values could wipe out a firm. To make matters worse, much of their borrowing was short-term, in the overnight market—meaning the borrowing had to be renewed each and every day. For example, at the end of 2007, Bear Stearns had $11.8 billion in equity and $383.6 billion in liabilities and was borrowing as much as $70 billion in the overnight market. It was the equivalent of a small business
with $50,000 in equity borrowing $1.6 million, with $296,750 of that due each and every day. One can‘t really ask ―What were they thinking?‖ when it seems that too many of them were thinking alike. And the leverage was often hidden—in derivatives positions, in off-balance-sheet entities, and through ―window dressing‖ of financial reports available to the investing public. The kings of leverage were Fannie Mae and Freddie Mac, the two behemoth government-sponsored enterprises (GSEs). For example, by the end of 2007, Fannie‘s and Freddie‘s combined leverage ratio, including loans they owned and guaranteed, stood at 75 to 1.‖ 9. On 3-15-2012 Economist Charles Kadlec, writer for The Daily Reckoning andmember of the Economic Advisory Board of the American Principles Project reported thefollowing in an article entitled ―Tim Geithner Covers for Corruption on PennsylvaniaAvenue‖: ―The government through Fannie Mae and Freddie Mac directed $5.2 trillion (that is trillion with a ―T‖) of capital to increase the supply of mortgages. In addition, it passed a law that required banks to make billions of dollars in loans to individuals that were unlikely to pay off the loans, in the end with 0% down. In 1998, Fannie Mae announced it would purchase mortgages with only 3% down. And, in 2001, it offered a program that required no down payment at all. Between 2001 and 2004, subprime mortgages grew from $160 billion to $540 billion. And between 2005 and 2007, Fannie Mae‘s acquisition of mortgages with less than 10% down almost tripled. These loans are now known as ―subprime‖ and ―alt A‖ loans. At the time they were made, Fannie Mae and Freddie Mac encouraged their issuance by lowering their standards and buying them up from the now vilified mortgage brokers, S&Ls, banks and Wall Street investment banks. This activity was not due to a lack of regulation or oversight as you (Treasury Secretary Geithner) claim. Both companies are under the direct supervision of a federal regulator and Congress. At the time these loans were being purchased by these two Government Sponsored Enterprises, their actions were defended by many in Congress who, led by Senator Chris Dodd and Congressman Barney Frank, saw such reckless lending as a successful government initiative. At the same time, the easy money policies of the Federal Open Market Committee, of which you were a voting member, were feeding an asset bubble in residential real estate, providing what proved to be an irresistible lure not only for speculators, but also for American families trying desperately to buy a house before inflation robbed them of their chance for home ownership. Six top executives of Fannie Mae and Freddie Mac have been charged by the Securities and Exchange Commission with securities fraud for hiding the size of the purchases of low quality mortgages from the market. In addition, the normal check on excessive leverage provided by unwilling lenders was overwhelmed by the perception, now validated, that Fannie
Mae and Freddie Mac debt were backed by the full faith and credit of the federal government. This created a willing buyer backed by the federal government with unlimited access to credit markets and a trillion dollar budget. No wonder S&Ls and Wall Street found ways to satisfy the demand. Blaming a lack of regulation for the subsequent losses is political spin meant to cover up the greed and corruption on Pennsylvania Avenue that led to the crisis. these two state sponsored financial giants have cost taxpayers more than $140 billion and are seeking billions more in bailout funds. 10. Any rational person would ask, as the FCIC Report pondered, ―What werethey thinking.‖ And more important: ―What are they up to?‖ These highly questionableanomalies would prompt any rational person to ask the following questions: A. Why would the banks create questionable loan products and lure prospective borrowers into these loans, knowing that if interest rates were to rise, these clients would be unable to make their payments; B. Why would banks sell mortgage-backed securities to investors and then not follow the governing documents and deliver the notes to the investors; C. Why would the originators of the loans purport to be the lender, when the loans were pre-funded by the investors of the MBS‘s; D. Why would the Depositors fail to record the documents as required by law to at the county level, thus slandering owners titles across America; E. Why would mortgage servicers promise to modify borrower‘s loans and then repeatedly ―lose‖ the paperwork which was sent in multiple times; F. Why would the Originating ―Lenders‖ stop using standard underwriting to approve loans; G. Why would originators accept and encourage inflated appraisals; H. Why would the banks fraudulently fabricate documents and then have robo-signors forge them; I. Why would the originators not deliver the notes to the trusts thus rendering the MBS non-mortgage-backed; J. Why would the banks pretend that this economic crisis was a random event that they knew nothing about; K. Why would the Federal Reserve lower interest rates and keep them low knowing that they would be creating a bubble;
L. Why are the courts pushing foreclosures through as fast as they can, thereby tearing families apart while 20 million housing units in America are vacant and rotting and the banks cannot keep up with this burgeoning inventory of REO properties. Statistics prove that foreclosure breeds foreclosure and creates a vicious cycle: more homelessness, despair, and crime in addition, causes real estate prices plunge further and further thereby affecting all Americans; M. Why are 90% of all mortgage Originators now bankrupt; N. Why are banks which were considered too big to fail, growing even larger as they acquire the banks which failed for literally pennies on the dollar; O. Why are the banks CEO‘s and executives paying themselves Millions and Millions for companies they ran into the ground; P. Why did corporations move manufacturing out of this country; Q. Why has our free-market economy, which entails risk, eliminated risk through the purchase of credit default swap ―insurance‖; R. Why are numerous cases against the largest banks being prosecuted and settled but no one is being sent to jail... 11. The Conspirators reaped, and are continuing to reap, untold Trillions of dollarswhile others writhe in misery, anxiety, anguish, and panic. This unconscionable lust for powerand lack of social conscience displayed by the Conspirators has resulted, and is continuing toresult, in millions of citizens being thrown out of their homes oftentimes with nowhere to go, anincrease in suicide, massive unemployment, a lowered standard of living, and trillions of dollarsof wealth stripped from the American public and put into the Conspirators already burgeoningpockets. 12. This atrocious, flagrant and abominable scheme is ongoing and its final objectiveis yet to be realized, but is indeed looming. However, judges across the country have also askedthemselves the aforementioned questions and are finally beginning to see the truth and are rulingagainst the Conspirators. 13. The hope for our country is being placed in the hands of our judiciary which wasestablished by our founding fathers to mete justice equally; to see through the antics that theConspirators counsel will undoubtedly try to utilize to divert the judiciary‘s attention from thesubstantive allegations posed in this complaint, to the trivial and technical, in their attempt to
circumvent the laws of this nation. It is the hope of the Owners that the judiciary will have thecourage to uphold their sacred oaths and deliver a powerful message that will serve to deter theConspirators from future violations of the law. For anything less than that can only aid in thedisintegration of our civilized society. 14. This Conspiracy is being waged across the globe and is multi-pronged, howeverfor the purposes of the instant case, and other victims across America who are similarly situated,this supplemental evidence will focus on the role that foreclosure is playing in the Conspiracy.THE FIAT-BASED MONETARY SYSTEM 15. At the core of the Conspiracy is the collapse of the fiat monetary system used byAmerica and manipulated by the Conspirators. Fiat money is not asset-backed by gold or silverbut instead backed by ―faith‖ and debt where money is printed out of thin air. 16. This faith-based system requires that those at the helm of our largest institutionsoperate from a foundation of trust, ethics, honesty, integrity, compassion, morals and socialconscience. 17. The Conspirators have an expertise in the world of finance and economics andcontrol the world of finance. They have used this expertise and control to exploit the foundationof trust that Americans and others around the world relied upon, and manipulated the system totheir advantage. 18. History shows that any fiat debt-based monetary system is unsustainable andevery society which based its currency upon this system has collapsed. Its doom is based uponexpanding debt and the compounding interest needed to sustain that debt, thereby driving theengine of the economy. At some point in time, the debt reaches a point where it becomes so greatthat the compounding interest exceeds the revenue coming into the Treasury, at which point, thesystem collapses. “The money meltdown observed in Wall Street is what monetarists have been warning about for some time. What we are witnessing now is the failure of the central banking system. The debt-based fiat monetary system with compounding interest is simply unsustainable and the United States, occupying the pinnacle of the
capitalistic model, is being brought down by the inherent fallacies within its own monetary system.” — A. Kameel Wall Street Meltdown – Failure of Central Banking System by 10/20/08 the Edge 19. The Federal Reserve uses the ―magic‖ of Compounding Interest to fleece theAmerican people. Debora OMalley, M.Sc. and Melvin Pasternak, Ph.D. explained how easy itto do so in their March 15, 2012 article entitled ―The Money Making Magic of CompoundInterest‖: ―When Albert Einstein was asked: “What is the most fantastic thing you ever realized in all your studies?” He sarcastically responded, ―Compound interest.‖ ...the principles of compound interest can be used to make a substantial amount of money over time. Financially speaking, compounding is the exponential increase of an investment, or the interest you earn on interest. If you put $2,000 in the bank with a 5% annual interest, you will earn about $100 in interest the first year. If you leave that $100 in your account, the following year, your $2,100 will earn $105 in interest. Compound interest is most powerful over a long period of time. Using the above example, your $2,000 initial investment would double in about 14 years. If all the money remained untouched, it would earn twice as much interest between years 15 through 28. In year 29, youd effectively be earning 20% interest on the original investment (sometimes called "yield on cost"), all without needing to lift a finger.‖ 20. According to Modern Money Mechanics, a booklet produced by theFederal Reserve Bank of Chicago: ―Fiat currencies are backed by debt.‖ (loans). “As the debt grows, government‟s interest burden grows with it. The more our tax dollars are consumed by interest, the fewer dollars are available for discretionary spending. What‟s worse, more pressure is then exerted to use tax increases to fund mandatory spending programs, such as Social Security, Medicare, and Medicaid. We all know government spends more than it collects. The federal interest burden exists simply because government must actually service its debt. Interest, of course, represents the cost of debt service.” — Daniel J. Pilla 21. Those who have held the highest offices in America throughout historyhave continually warned that our fiat/debt-based monetary system was unsustainable.
“The eyes of our citizens are not sufficiently open to the true cause of our distress. They ascribe them to everything but their true cause, the banking system; a system which if it could do good in any form is yet so certain of leading to abuse as to be utterly incompatible with the public safety and prosperity. The Central Bank (now the Federal Reserve) is an institution of the most deadly hostility existing against the principles and form of our Constitution.” — Thomas Jefferson (1743 – 1826) “I place economy among the first and most important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. — Thomas Jefferson “World GDP is around $65 trillion but the latest Bank for International Settlements (“BIS”) statistics on outstanding derivatives contracts (Wall Street bets) indicate that they are currently $707* trillion as of June 2011 at face value (the true numbers are in the Quadrillions or more according to some sources). This means that the banks are betting over ten times the worlds GDP against each other, for each derivative (Las Vegas styled bet) is a bet against a counterparty. It is a matter of simple mathematics to realize the western fiat debt-based banking system is doomed. That means for every winner there is an equal loser. Some very big banks have certainly lost more money than exists in the real world”.*See BIS 2008; the notional amount of a derivatives contract refers to the value or nominal amount of the underlying to the derivatives contract; outstanding refers to open derivatives contracts that are held by market participants. 13) See BIS 2008 and WFE statistics (www.world-exchanges.org). — Benjamin fulfordA HOUSE OF CARDS SKILLFULLY ENGINEERED TO BRING DOWN THEECONOMY 22. The Conspirators meticulously crafted a scheme to control the collapse of ourmonetary system through a manufactured Depression in order to control We, the People, forwhen the masses are in survival-mode they are far easier to manipulate. “The Federal Reserve definitely caused the great depression by contracting the amount of currency in circulation by one third from 1929 to 1933.‖ —Milton Friedman Nobel Prize winning economist and Stanford University Professor “It must be realized that whoever controls the volume of money in any country is absolutely master of all industry and commerce. And when you realise that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” — President James Garfield (1831–1881) 20th President of the United States 23. The Great Recession was artificially created by the Federal Reserve through itsability to control interest rates (which we will explore in detail). The bubble they created and its
subsequent depression caused a panic where people sold, and are currently selling, their assetsfor pennies on the dollar in order to survive. The Conspirators then cunningly acquire theseassets with the fake money they create out of thin air, and acquire every commodity needed tocontrol every aspect of life thus rendering We the People of this world, enslaved to theConspirators for ―He who has the gold, indeed makes the rules.‖ 24. The Conspirators scheme was catalyzed by Mortgage-Backed Securities (―MBS‖),Warren Buffet referred to in 2002 as ―weapons of mass financial destruction.‖ These bonds werestyled after Michael Milliken‘s high-yield junk bond scheme which he developed in the 1980‘sthat landed him in jail. However, the Mortgage-backed securities of the 2000‘s evolved as theywere ―insured‖ by Credit Default Swaps which in 2009 Economist and writer for AtlanticMonthly, Charles Davi referred to as: ―the destroyer of economies‖. 25. MBS‘s were sold to Pension funds throughout the world ensuring that thecancerous tentacles created by the Conspiracy would spread and cause a collapse so deep andwidespread that We, the People of the world would one day be on our knees begging for mercyat which time the Conspirators will unveil their new Monetary system which grants to them thecomplete and absolute control over our world‘s monetary system. “I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man that controls Britains money supply controls the British Empire, and I control the British money supply.” — Baron Nathan Mayer Rothschild (1840 –1915)1984 GRACE COMMISSION REPORT VALIDATES THE IMPENDING COLLAPSE 26. In 1984, President Reagan appointed the Grace Commission to find ways to cutthe waste and inefficiency in the government, instructing its members to "be bold" and "worklike tireless bloodhounds; not to leave any stone unturned in your search to root outinefficiency." However, what the commission discovered was shocking: “One-third of all income taxes is consumed by waste and inefficiency in the federal government, and another one-third escapes collection owing to the underground economy. With two thirds of everyone‟s personal income taxes wasted or not collected, one hundred percent of what is collected is absorbed solely by interest on the Federal debt and by the Federal Government
contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on services which taxpayers expect from their Government.‖ 27. The Commission warned: “If fundamental changes are not made in Federal spending, as compared with the fiscal 1983 deficit of $195 billion, a deficit of over ten times that amount, $2 trillion, is projected for the year 2000, only 17 years from now. In that year, the Federal debt would be $13.0 trillion and the interest alone would be $1.5 trillion per year. “100 percent of what is now collected (as taxes) is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.‖ 28. If 100 percent of what was collected as revenue in 1982 was absorbed solely byinterest on the Federal debt, that compounding interest could only grow exponentially with eachsuccessive year even if the national debt were not to increase. The Conspirators were well awareof this fact but did nothing, as their power is based upon their complete and absolute control ofthe monetary and banking systems. Since 1982, our national debt has risen exponentially as aresult of the continual wars we have been engaged in since that time which has brought oureconomic system to the brink of collapse.THE CONSPIRATORS HAVE THEIR FINGER ON THE TRIGGER OF ECONOMICCOLLAPSE 29. The Conspirators have orchestrated events so that they now have their finger onthe trigger of economic collapse. The Conspirators own and control the five largest banks in ourcountry: JP Morgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs. Thesebanking institutions also control the International Swaps and Derivatives Association (―ISDA‖)which determines when and if a ―credit event‖ occurs in the Derivatives (MBS) market. If acredit event is ―determined‖, that determination initiates the pay off of Credit Default Swap bets. 30. These same 5 Conspirator-owned banks hold nearly 95 percent of the industry‘stotal exposure to derivatives contracts which now stands at $707 Trillion – an amount farexceeding their ability to pay off Credit Default Swap bets which now stand at $32,409 Trillion.Therefore, if the ISDA initiates a ―credit event,‖ determined by a default or write-down of Greekbonds, for instance, the Conspirators can bring about the collapse of their own banking
institutions, which in turn, will bring about the collapse of the world‘s banking systems. Thus,the world‘s economy is now resting upon whether these 5 banks declare a default. In other words,the system the banks created is a House of Cards just waiting for a single card to fall.THE ―NON‖FEDERAL RESERVE 31. Among the critically placed Conspirators are the Insiders at the Federal Reserve(―Fed‖) ; a privately held corporation, a central bank at the helm of the American economy, for itpossesses the power to manipulate the economic system of the United States. “The passage of the Federal Reserve Act proved every allegation Thomas Jefferson had made against a central bank in 1791: that the subscribers to the Federal Reserve Bank stock had formed a corporation, whose stock could be and was held by aliens; that this stock would be transmitted to a certain line of successors; that it would be placed beyond forfeiture and escheat; that they would receive a monopoly of banking, which was against the laws of monopoly; and that they now had the power to make laws, paramount to the laws of the states. No state legislature can countermand any of the laws laid down by the Federal Reserve Board of Governors for the benefit of their private stockholders. This board issues laws as to what the interest rate shall be, what the quantity of money shall be and what the price of money shall be. All of these powers abrogate the powers of the state legislatures and their responsibility to the citizens of those states.” — Eustace mullins Secrets of the Federal Reserve pg 35 32. Throughout the history of the United States, many in government fought to oustthe central banking system utilized on and off for hundreds of years, but in a covert move in1912, the Conspirators devised a plan to seize control the monetary system once and for all andcalled it the ―Federal‖ Reserve System. We, the People presumed that the ―federal‖ Reserve wasactually part of our government, but the name was a ruse as the Fed was established solely forthe Bankers so that they could exert Power over our government which, in reality, is not ademocracy but an Oligarchy. 33. According to the Federal Reserve‘s website: ―The Federal Reserve is independentwithin government in that its monetary policy decisions do not have to be approved by thePresident or anyone else in the executive or legislative branches of government. Its authority isderived from statutes enacted by the U.S. Congress and the System is subject to Congressionaloversight.‖
34. When the Federal Reserve came into being in 1913 it was opposed by many, butthose voices were not heard because the Conspirators knew that in order to control the masses,they also had to control the media, which they quickly bought up and to this day, own andcontrol.HISTORY IS REPEATED 35. The Conspiracy began long ago as evidenced by the following pamphletpublished by the United States Banker‘s Association in 1892: “We (the bankers) must proceed with caution and guard every move made, for the lower order of people are already showing signs of restless commotion. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance. The Farmers Alliance and Knights of Labor organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them. At the coming Omaha Convention to be held July 4th (1892), our men must attend and direct its movement, or else there will be set on foot such antagonism to our designs as may require force to overcome. This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination (conspiracy) and legislation. The courts must be called to our aid, debts must be collected, bonds and mortgages foreclosed as rapidly as possible. When through the process of the law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders. History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism. The question of tariff reform must be urged through the organization known as the Democratic Party, and the question of protection with the reciprocity must be forced to view through the Republican Party. By thus dividing voters, we can get them to expand their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete action, we can secure all that has been so generously planned and successfully accomplished.”
36. Equally revealing is the following article posted on December 13, 2011 byWashington‘s Blog entitled: Fraud By The Big Banks – More Than Anything Done By TheLittle Guy – Caused The Financial Crisis, as it too reveals that a conspiracy is indeedunfolding today: ―The U.S. Treasury’s Office of Thrift Supervision Noted Last Year: The FBI estimates that 80 percent of all mortgage fraud involves collaboration or collusion by industry insiders This confirms what one of the country‟s top fraud experts has said for years: that it was fraud by the big banks – more than anything done by the little guy – which caused the financial crisis: William K. Black – professor of economics and law, and the senior regulator during the S & L crisis – explained last month before to the Financial Crisis Inquiry Commission why banks gave home loans to people who they knew couldn‟t repay. The whole piece is a must-read, but here are excerpts from the introduction: The data demonstrate conclusively that most liar’s loans were fraudulent, which means that there were millions of fraudulent mortgage loans because liar’s loans became common (Credit Suisse estimates that they represented 49% of new originations by 2006). The data also demonstrate that even minimal underwriting of the loan files was sufficient to detect the overwhelming majority of such fraudulent liar‟s loans. No honest, rational lender would make large numbers of liar’s loans. The epidemic of mortgage fraud was so large that it hyper-inflated the housing bubble, which allowed refinancing to further extend the life of the bubble (and the depth of the ultimate Great Recession. In the cases where there have been even minimal investigations (New Century, Aurora/Lehman, Citi, WaMu, Countrywide, and IndyMac) senior lender officials were aware that liar’s loans were fraudulent. Liar‟s loans optimized short-term accounting income by creating a “sure thing” (Akerlof & Romer 1993). A fraudulent lender optimizes short-term fictional accounting income and longer term (real) losses by following a four-part recipe: A. Extreme Growth B. Making bad loans at a premium yield C. Extreme leverage D. Grossly inadequate loss reserves. Note that this same recipe maximizes fictional profits and real losses. This destroys the lender, but it makes senior officers that control the lender wealthy. This explains Akerlof & Romer‟s title – Looting The Economic Underworld of Bankruptcy for Profit. The failure of the firm is not a failure of the fraud scheme. (Modern bailouts HAVE recapitalized the looted bank and left the looters in charge of it.) The first two “ingredients” are related. Home lending is a mature, reasonably competitive industry. A lender cannot grow extremely rapidly by making good loans. If he tried, he‟d have to cut his yield and his competitors would respond. His income would decline. But he can guarantee the ability to grow extremely rapidly by being indifferent to loan quality and charging weaker credit risks, or more naïve borrowers, a premium yield. In order to become indifferent to loan quality the officers controlling the lender must eviscerate its underwriting. There is no honest reason for a secured lender to seek or permit inflated appraisal values. This is a sure marker of accounting control fraud – a marker that juries easily understand. In other words, banks made loans to borrowers who they knew couldn’t really repay because the heads of the
banks could make huge bonuses based on high volumes and fraudulent appraisals, and they didn’t care if their own companies later failed. In short, they looted their companies and the economy as a whole. Professor Black brings us current to where we are today: History demonstrates that if the control frauds get away with their frauds, they will strike again. By allowing the banks to use their political power to gimmick the accounting rules to permit them to hide their massive losses on liar‟s loans we have made it far harder to take effective administrative, civil, and criminal sanctions against the elite frauds that caused the Great Recession. Hiding the losses also adopts the dishonest Japanese approach that cripples economic recovery and public integrity. Prosecuting the elites control frauds can be done successfully. Create a new “Top 100” priority list and appoint regulators that will make supporting the Justice Department a top agency priority. That‟s how we obtained over 1000 priority felony convictions of elite S&L criminals. No controlling officer of a large, non-prime specialty lender has been convicted of running a control fraud. Only one has even been indicted. The FBI has written that any discussion of the crisis that ignores the role of mortgage fraud is ―irresponsible.‖But instead of prosecuting fraud, the government just continues to cover it up.”THE CREATION OF MONEY 37. The Conspirators were able to perpetrate this scheme because few understand themechanics of the monetary system employed by the U.S.: “All the perplexities, confusion and distress in America arise, not from the defects of the constitution or confederation, not from want of honour or virtue, so much as from the downright ignorance of the nation, of coin, credit and circulation.” — President John Adams (1735–1826) “I believe that banking institutions are more dangerous to our liberties than standing armies and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks... Will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” — President Thomas Jefferson The Debate Over The Recharter Of The Bank Bill, (1809) 38. The underlying methods employed by the banking industry began centuries agoaccording to Modern Money Mechanics, a booklet published by the Federal Reserve: “It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their "deposit receipts" whenever they needed gold or
coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money. Then, bankers discovered that they could make loans merely by giving their promises to pay, [rigging the system to their advantage] or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.” 39. Thus, the ―fractional reserve‖ system of banking was born, where a deposit in theform of cash, or a promissory note can be used by the bank to monetize or create 9X the amountof the ―deposit.‖ The key to the whole operation lay in the publics willingness to leave theirassets in the banks vaults and use the banks notes. This system is based on the faith andignorance of the people which allows the banks to use the assets they have on deposit, set aside10% of those deposits as a reserve (capital requirement) and loan out the remainder thus earninga profit on the spread between what they paid for the ―wholesale‖ money at the Fed discountwindow, and the amount they charged to the borrower. “The actual process of money creation takes place primarily in banks ... bankers discovered that they could make loans merely by giving their promise to pay, or bank notes, to borrowers. In this way banks began to create money. Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could „spend‟ by writing checks, thereby „printing‟ their own money.” — Modern Money Mechanics Federal Reserve Bank of Chicago 40. Throughout history this system allowed the Bankers to get rich while mosteveryone else got by. It created an unfair system where those at the top who controlled themoney had the power, while everyone else unknowingly was enslaved. 41. When a borrower takes out a bank loan or mortgage, the bank does not use itsown funds but goes to the Fed where it [electronically] receives 10 times the amount of the loanin new currency. Ten percent of this money is allocated to the borrower, 10%, held in reserveby the bank and the remaining 80%, allocated to the bank to lend or invest.
“A deposit created through lending is a debt that has to be paid on demand of the depositor, just the same as the debt arising from a customers deposit of checks or currency in the bank. Of course they [the banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers transaction accounts.” — Federal Reserve Bank Chicago, Modern Money Mechanics, p. 6 “Banks create credit. It is a mistake to suppose that bank credit is created to any extent by the payment of money into the banks. A loan made by a bank is a clear addition to the amount of money in the community.‖ — Encyclopædia Britannica 14th Edition “What they [banks] do when they make loans is to accept promissory notes in exchange for credits to the borrowers‟ transaction accounts.‖ —Modern Money Mechanics, pg 6 “The initial $10,000 of reserves distributed within the banking system gives rise to an expansion of $90,000 in bank credit (loans and investments) and supports a total of $100,000 in new deposits under a 10 percent reserve requirement. The deposit expansion factor for a given amount of new reserves is thus the reciprocal of the required reserve percentage (1/.10 = 10). Loan expansion will be less by the amount of the initial injection.” — Modern Money Mechanics Federal Reserve Bank of Chicago - pg 8 42. In the events leading up to the economic crisis, the Conspirators controlled boththe Federal Reserve (―Fed‖) and the banks and used the Fractional Reserve System to rape thesystem. The Conspirators used borrower‘s promissory notes as ―deposits‖ and monetized 9Xtheir face value through the Fed. When the Fed issues ―credit‖ to the bank, it sells the―credit/‖money‖ at a discount interest rate. The bank charges the borrower a higher rate andprofits from the difference. The Fed/Treasury lists the loan as a ―demand deposit‖ – a liabilityand the Note as an asset on its books thus canceling each other out. These transactions aregoverned by the GAAP (Generally Accepted Accounting Principles) which banks must employ.However, the Bank must then pay the Fed for the use of this ―credit‖ through the borrowersmortgage payments, but the Conspirators ledgered the liability on the PUBLIC side (the Fed) andledgered the asset on the PRIVATE side, as their own asset and continued to use borrowersNOTEs over and over again. 43. The Conspirators then used the same Notes and pretended to sell them toinvestors of the MBS which had pre-funded the borrowers loans with TBA (―to be announced‖)funds brazenly violating the Pooling and Servicing Agreements established by the MBS Trusts.
The Conspirators held the Notes which should have been delivered to the MBS Trusteesaccording to New York law which governs the securities, and sold the same notes repeatedlyto multiple trusts. The Notes were simply copied in order to sell these notes to MBS investorsboth here and abroad and so they could be used once again to ―validate ownership‖ inforeclosure cases according to the FCIC report as of January 2011: ―Goldman Sachs alone packaged and sold $73 billion in MBS‘s from July 1, 2004 to May 31, 2007. These MBS‘s referenced more than 3,400 mortgage securities, with 610 of them referenced at least twice. This is apart from how many times these securities may have been referenced in synthetic CDO’s created by other firms.‖TITLE CRISIS 44.The Conspirators needed to divert the attention of the masses so as to delay the public fromdiscovering their Conspiracy prematurely. They accomplished said distraction in myriad ways,one being the creation of a title crisis. The Conspirators intentionally failed to record theconveyance transactions of real estate at the county level and bypassed the law completely bycreating their own recording database called the Mortgage Electronic Registration System(MERS) - a secretive veil which would allow them to hide their crimes. 45. The Conspirators not only failed to record these conveyances, but in failing todeliver the Notes to the Trusts, in direct violation of the governing documents of the Trust, acloud is created on the titles of nearly every property in the U.S. according to Professor AdamLevitin‘s testimony as stated below. 46. In sworn testimony by Linda De Martini supervisor and operational team leaderfor the Litigation Management Department for BAC Home Loans Servicing L.P. in Kemp VCountrywide, ―BAC Servicing‖ testified that Countrywide NEVER delivered the notes to thetrusts. Again, any rational person would ask why. 47. Professor Adam Levitin testified before the House Financial Services Committeeand stated:
―If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact, not be backed by any mortgages whatsoever. The chain of title concerns stem from transactions that make assumptions about the resolution of unsettled law. If those legal issues are resolved differently, then there would be a failure of the transfer of mortgages into securitization trusts, which would cloud title to nearly every property in the United States and would create contract rescission/putback liabilities in the trillions of dollars, greatly exceeding the capital of the US‘s major financial institutions….Recently, arguments have been raised in foreclosure litigation about whether the notes and mortgages were in fact properly transferred to the securitization trusts. This is a critical issue because the trust has standing to foreclose if, and only if it is the mortgagee. If the notes and mortgages were not transferred to the trust, then the trust lacks standing to foreclose…If the notes and mortgages were not properly transferred to the trusts, then the mortgage-backed securities that the investors‘ purchased were in fact non-mortgage-backed securities. In such a case, investors would have a claim for the rescission of the MBS, meaning that the securitization would be unwound, with investors receiving back their original payments at par (possibly with interest at the judgment rate). Rescission would mean that the securitization sponsor would have the notes and mortgages on its books, meaning that the losses on the loans would be the securitization sponsor‘s, not the MBS investors, and that the securitization sponsor would have to have risk-weighted capital for the mortgages. If this problem exists on a wide-scale, there is not the capital in the financial system to pay for the rescission claims; the rescission claims would be in the trillions of dollars, making the major banking institutions in the United States would be insolvent.FORECLOSURE CRISIS 48. The Conspirators intentionally created a complex sham intended to create chaosin the courts thereby burdening them with millions of foreclosures. The defaults began with thesubprime mortgages, but this momentum soon ―trickled up‖ to long-standing mortgages whereborrowers had amassed a great deal of equity in their properties which would soon be lost toplummeting real estate values. 49. The Conspirators instructed the courts to ―accelerate the foreclosures‖ under theguise that ―the economy would then stabilize.‖ But sooner or later the public and the courtswould learn the truth, so the Conspirators had to make sure their plan so deeply embedded insociety that there could be no escape from the consequences of the economic collapse, just as theBankers pointed out in their 1892 pamphlet:
―for the lower order of people are already showing signs of restless commotion. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance.” LAYING THE GROUNDWORK FOR COLLAPSE 50. The Conspirators methodically laid the groundwork which would create a newmortgage lending infrastructure where the era of ‗fiduciary‘ relationships was thrown out thewindow. The values upon which America was founded would be exploited as the Conspiratorsknew that Americans and the courts would presume that highly respected lending institutionsoperated from a foundation of trust. 51. The Conspirators attempted to disguise their scheme in a ―complex language‖they concocted which was designed to confuse, confound and overwhelm the average personthus enabling them to carry out their plan. “Monetary science, finance and economics are mired in a convoluted language. Economics experts propagate multiple terms and multiple definitions for those terms. This quagmire hinders the ability of individuals outside the economic elite to reach reasonable conclusions. Because the current system is inherently unsound, unstable and unethical, those who perpetuate it must attempt to keep those it abuses in ignorance, ensuring they are confounded and misdirected from the true issues.” - Trace Mayer Monetary scientist and author of The Great ContractionDEREGULATION 52. The objective of the Conspirators could not be realized if the banking industrywas regulated, so in the 1990‘s a series of events, beginning with the merger of Citibank andTravelers Insurance in 1998, illegal at the time, began to unravel the long-standing regulationswhich ensured that catastrophes like the Great Depression could not occur again. Because themerger of Citibank and Travelers Insurance violated the Glass-Steagall Act, enacted in 1934 toseparate commercial banking from investment banking to prevent Wall Street and the largestbanks from gambling and risking the deposits of others, the Conspirators had to repeal the Glass-Steagall Act.
53. The Conspirators knew that Congress would do their bidding because as IllinoisSenator Dick Durbin stated on April 29, 2009: "the banks, hard to believe in a time when werefacing a banking crisis that many of the banks created, are still the most powerful lobby onCapitol Hill. And they frankly own the place." They indeed own ―the place‖ as a result ofpaying Billions to lobbyists. New legislation quickly passed which began to dismantle the Glass-Steagall Act and the Citi-Travelers merger paved the way for the Conspirators‘ scheme to unfold. 54. Furthermore, the repeal of the Glass-Steagall Act effectively opened the door forthe securitization of mortgage loans - the catalyst needed to collapse the economy.SHIFTING THE RISK FROM THE CONSPIRATORS TO THE SHAREHOLDERS 55. In 1998, the Conspirators shielded any potential risk away from themselves byconverting the once privately-held investment banks on Wall Street into publicly-heldcorporations, thereby shifting risk to the hapless shareholders of those companies. As a result ofthis paradigm shift, compensation on Wall Street and the largest banks rose meteorically whichafforded the Conspirators the means to ―invest‖ even more Billions of dollars in lobbying effortsto ensure their control of Washington. By bankrolling the elections of those they wanted in office,those who would protect their interests, they made sure these people ‗remembered‘ who put themin that office.DISEMPOWERING THE MIDDLE CLASS 56. The Conspirators sought to deter the American public from recognizing theirscheme by systematically disempowering the middle class of America. In 1994 the Democratsand Republicans passed NAFTA which sent 50,000 manufacturing plants overseas, hence a lossof jobs and revenue for the government through taxes, under the guise of fulfilling theirobligation of ‗making profit for their shareholders.‖ By obliterating jobs, they forced the middle-class into survival-mode, thereby robbing the American people of their pensions, and assets, thusrendering them impotent, shamed, humiliated and focused on supporting their families. Theforeclosure crisis, a tactic they had employed in the past, was used to destabilize Americans andstrip them of their assets.DIVIDE AND CONQUER
57. To distract and divert the attention of the public, thereby delaying the prematurediscovery of the Conspiracy and potentially stopping it, the Conspirators have and still areemploying an effective strategy known as ―divide and conquer.‖ This strategy is being carriedout to extreme absurdity today by filling the airwaves with dissension between America‘s twopolitical parties on the most ridiculous, inconsequential and trivial issues which trigger emotion.As they pit one side against the other, the Conspirators pour fuel upon these issues and maintaina constant state of chaos in the population.CREATING A WEAPON OF MASS FINANCIAL DESTRUCTION: MORTGAGE-BACKED SECURITIES 58. The final desecration of the Glass-Steagall Act in 1998-1999 opened the door forthe Conspirators to introduce new ‗innovative‘ products into the American marketplace knownas Mortgage Backed Securities (―MBS‘s‖). These securities played an integral role in theConspirators scheme as they were designed to earn high fees, to make money out of nothing,create widespread fraud which would contribute to lawsuits whose settlements would be so greatand so widespread that said settlements could result in the collapse of the financial institutions;and over-leveraging the institutions to such a great degree that the Conspirators would have yetanother means of collapsing the economy. These securities were backed by the valuablepromissory notes on borrowers‘ homes and considered to be a ‗low risk‘ investment as providinga roof over ones‘ family‘s head is a priority to American families. 59. After a borrower closed on a mortgage, that mortgage would be combined withother similar mortgages and converted into a securitized instrument. These instruments would bepooled together and create a Collateralized Debt Obligation (―CDO‖) where pieces of that poolwere sold as bonds to investors all over the world referred to as certificateholders. 60. The Conspirators needed both borrowers and investors, each a pawn in a muchlarger game they were unaware of - a pervasive scheme where the Conspirators could exploitthem in order to rob the world and collapse the economy. 61. The Conspirators churned out MBS‘s by the millions despite the fact that theywere taking enormous risks which many on Wall Street found to be both incredulous andirrational. These investments over-leveraged their respective companies with (high-risk) MBS
securities. The risk was clear: if anything were to go wrong in the market, the ―investment‖company would fail; exactly what the Conspirators set out to do as it provided a cover ofplausible deniability. 62. The January 2011 Financial Crisis Inquiry Commission (―FCIC‖) Report - Pg230- Commission Conclusions on Chapter 11 -The Bust stated that over-leverage was indeeda major cause of the financial crisis: ―The Commission concludes that the collapse of the housing bubble began the chain of events that led to the financial crisis. High leverage, inadequate capital, and short-term funding made many financial institutions extraordinarily vulnerable to the downturn in the market in 2007. The investment banks had leverage ratios, by one measure, of up to 40 to 1. This means that for every $40 of assets, they held only $1 of capital. Fannie Mae and Freddie Mac (the GSEs) had even greater leverage—with a combined 75 to 1 ratio. Leverage or capital inadequacy at many institutions was even greater than reported when one takes into account ―window dressing,‖ off-balance-sheet exposures such as those of Citigroup, and derivatives positions such as those of AIG. The GSEs contributed to, but were not a primary cause of, the financial crisis. Their $5 trillion mortgage exposure and market position were significant, and they were without question dramatic failures. They participated in the expansion of risky mortgage lending and declining mortgage standards, adding significant demand for less-than-prime loans. However, they followed, rather than led, the Wall Street firms. The delinquency rates on the loans that they purchased or guaranteed were significantly lower than those purchased and securitized by other financial institutions.‖INFLATING THE BUBBLE 63. The Fed has the ability to intentionally create a bubble by lowering interest rates,as credit is then plentiful which opens the market for increased debt. To prevent a bubble frominflating, the Fed must slowly raise interest rates for if it does not, a bubble will result. 64. According to the Federal Reserve website: “A higher Fed funds rate means banks are less willing to borrow money to keep their reserves at the mandated level. This means they will lend less money out, and the money they do lend will be at a higher rate since they themselves are borrowing money at a higher rate. Since loans are more difficult to get and more expensive, businesses will be less likely to borrow, thus slowing the economy. When the Fed raises rates, it is called contractionary monetary policy. “
65. The consequence of a bubble is inflation for each new loan ―monetizes‖ 10times its amount thereby adding to the amount of money in circulation which in turn devaluesthe dollars currently in circulation. According to the inflation calculator at CoinNews.net,validated by numerous sources, if you were to purchase on item in 1913 for $20.00, the year theFed was established, that same item would cost $454.42 in 2012. 66. The Conspirators chose real estate as the vehicle to fuel their bubble because, asChairman of the Federal Reserve, Ben Bernacke stated in 2005 amid warnings of a bursting realestate bubble: “Historically, real estate has never dropped in value and therefore there is nobubble.” Bernacke made this statement despite the fact that at that time, irrefutable evidenceexisted to the contrary. 67. In 2002 the Federal Reserve began to inflate the bubble needed to achieve theConspirators objective and lowered interest rates from 6.5% to 1.25% which made credit easy toobtain. These low rates initiated a ―feeding frenzy‖ and as anticipated, unwary borrowers tookthe bait. The market, now flooded with homebuyers, artificially drove up property ―values‖which resulted in home prices doubling from 1996 to 2006. “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks... Will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” — President Thomas Jefferson The Debate over the Recharter of the Bank Bill, (1809) “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens....while the process impoverishes many, it actually enriches some. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” — John Maynard Keynes (1883–1946) British Economist 1919-Economic Consequences of PeaceCREATING LOANS DESIGNED TO DEFAULT
68. To fuel the real estate bubble, the Conspirators needed a great quantity ofmortgage loans which would have a high percentage of default, not if, but when the Conspiratorsraised interest rates. Under the altruistic guise of ‗helping more people to achieve the Americandream,‘ the non-partisan Conspirators instructed their cronies in Congress to enact laws in boththe Bush and Clinton administrations which created a whole new market of borrowers. One ofthose new laws was the Community Reinvestment Act which made it illegal for a bank not togrant a loan to a ―sub-prime‖ borrower. In the past, these borrowers were unable to securemortgages because they did not meet underwriting guidelines designed to protect lenders fromdefault. But the Conspirators didn‘t care about underwriting guidelines as they needed loanswhich would default, so they exploited these borrowers. 69. The Conspirators enticed more borrowers into their web of deceit with a bevy ofnew mortgage products: no-document loans, stated income loans, 100% of purchase loans, andadjustable rate mortgages, which allowed borrowers to obtain loans under suspiciouscircumstances. To lure even more unsuspecting borrowers into loans they could not afford ifinterest rates rose, the lenders offered ‗teaser interest rates‘ as low as 1.00% for a specifiedlength amount of time. These ‗teaser rates‘ delayed the onset of the true higher payments whichwould go into effect at a specified time in the future determined by the prevailing interest rates atthat specific time. In other words, if interest rates rose, borrowers‘ payments would rise -exponentially. And these loans had a far greater chance of default because they were „designed todefault.‟ 70. These loans were replete with fraud as countless lawsuits have attested, but theConspirators did not care. To ensure that the loans would default, the Conspirators set upconditions which induced bank employees with bonuses, high salaries. If that tactic wasunsuccessful, the employees were threatened with the loss of their jobs if they didn‘t produceloans ...and fast! Bank employees were pushed to relax or completely eliminate underwritingstandards, inflate appraisals; essentially telling borrowers anything to get them to sign loandocuments. *See sworn testimony from bank employees at the end of this document. 71. Borrowers were unaware that their notes were being converted into ‗securities,‘pooled together with other mortgages and sold to investors, with the majority of the loans pre-
funded by the MBS investors who had advanced funds according to the Federal Reserve Bank ofNew York Staff Reports entitled ―TBA Trading and Liquidity in the Agency MBS Market‖ byJames Vickery and Joshua Wright, Staff Report No. 468 - August 2010: ―A less widely recognized feature is the existence of a liquid forward market for trading agency MBS, out to a horizon of several months.3 The liquidity of this market raises MBS prices and improves market functioning. It also helps mortgage lenders manage risk, since it allows them to ―lock in‖ sale prices for new loans as or even before those mortgages are originated. The vast majority of agency MBS trading occurs in this forward market, which is known as the TBA market (TBA stands for ―to be announced‖). In a TBA trade, the seller of MBS agrees on a sale price, but does not specify which particular securities will be delivered to the buyer on settlement day. Instead, only a few basic characteristics of the securities are agreed upon, such as the coupon rate and the face value of the bonds to be delivered. *3 In a forward contract, the security and cash payment for that security are not exchanged until after the date on which the terms of the trade are contractually agreed upon. The date the trade is agreed upon is called the ―trade‖ date. The date the cash and securities change hands is called the ―settlement‖ date.‖SECURITIZING THE LOANS 72. The process of Securitization was designed to distance the Conspirators fromliability and rob citizens of Trillions of dollars. The following is the securitization process: A. Mortgages loans are obtained or ―originated‖ by ―lenders‖: large banks, mortgage brokers etc. B. The loans are then sold to a ―Sponsor‖ - typically a subsidiary of the originating bank created to distance the bank from potential liability. This sponsor is called a "special purpose vehicle/entity" "SPV"/―SPE‖, and is a tax-exempt company or trust which forms a passive shell which is ―bankruptcy remote‖, meaning that if the original ―lender‖ goes into bankruptcy, the assets of the lender cannot be seized by the creditors of the bank. In order to achieve this status, the governing documents of the bank restrict its activities to those necessary to complete the issuance of securities, for once the assets are transferred to the Sponsor/SPV, there is normally no recourse to the originator. C. The Sponsor assembles the newly-purchased loans into pools consisting of approximately 5,000 mortgages. D. The Sponsor then sells the pool of loans to a Depositor.
E. The Depositor issues the bonds/certificates created by the Underwriter of a Conspirator-owned Wall Street Investment Bank (Goldman Sachs) backed by the underlying mortgage loan. F. The depositor establishes a trust and lays out the rules the trust must follow according to a ―pooling and servicing agreement.‖ G. The depositor typically owns 100% of the beneficial interest in the issuing entity and is usually the parent, or a wholly owned subsidiary of the parent, which initiates the transaction. H. Each trust issues Certificates which are sold to large institutional investors. I. The depositor transfers loans to the Trust in accordance with the PSAs. J. The Depositor works with the Underwriter (Investment Bank such as Goldman Sachs) to sell the securities to investors. K. Underwriters of Conspirator-owned Wall Street Investment Banks pay the depositor with funds from the MBS Investors. L. Underwriters convert loans into security bonds.CREATING MBS BONDS FOR INVESTORS TO PURCHASE A. Registration statements are filed with the Securities and Exchange Commission(SEC) which includes a description of the offering, a ―prospectus‖ that explains the generalstructure of the investment. Prospectus supplements contain specific detailed descriptions of themortgage pool. To lure unsuspecting investors, the Prospectus Supplements purported to provideaccurate statistics regarding the mortgage loans in the collateral group and the entiresecuritization. B. The investment banks set up the structure of the transaction. C. Underwriters at the investment banks pre-sold bonds before the loans wereoriginated, which is referred to as forward selling. D. MBS Certificates/bonds were categorized based upon risk into various levels ortranches. The highest senior bonds carried the lowest risk and were paid first whereas the lowertranches, while paying a higher rate of interest, carried a higher risk. E. MBS bonds were based upon specific criteria which placed each loan into aspecific ―tranche‖ based upon the FICO credit score of the borrower, loan-to-value ratio of theloan, outstanding principal balance of the loans, geographic location, whether the loans were forpurchase or refinance purposes, a primary residence, second home, or investment property, andinformation concerning when a loan would be determined to be delinquent.
F. The most common securitization trusts, having lower yields, were theConspirator-owned (flagrantly run into the ground by leveraging their assets 75:1) privately-heldcorporations, Fannie Mae and Freddie Mac. Although these institutions are referred to asgovernment-sponsored enterprises, the title is misleading. G. Investors desiring a higher yield purchased certificates from private labelsecurities firms, such as Goldman Sachs. H. Each Certificate entitled the investor to a specified portion of the mortgagepayments based upon the level of perceived risk in the certificates which were typically ratedAAA. I. Investors acquired a percentage of ownership interest in the cash flow from themortgage loan payments and in the promissory notes - the assets of the trust, which weresupposed to be held by the Trustee on behalf of the certificate-holders. J. According to Investopedia, the MBS Trust (its trustee being an agent for theConspirators) typically purchased credit default swap ―insurance‖ as a ―credit enhancement‖used to entice investors into thinking they were buying low-risk investments which wereguaranteed not to lose. All tranches received periodic payments based on the cash flows from thecredit default swaps. K. If a ―credit event‖ occurred, such as a mortgage default, and reached a specificdefault percentage, starting from the lowest tranche and working its way up that tranche wouldbe liquidated causing investors to lose their investment. But if the certificates were covered byCDS insurance the investors were compensated for their losses, if the insurance company wasnot bankrupted as AMBAC (American Municipal Bond Assurance Corporation) was in 2010.THE MONTH TO MONTH OPERATION FOR BORROWERS A. The mortgage Servicer, an agent for the Conspirators, collects the mortgage payments, take its fee off the top and passes the remainder to trustee of the MBS trust, another agent of the Conspirators. B. Servicer‘s are responsible for collecting delinquent loans and determining when to charge off a loan by writing down its balance - a conflict of interest as the Servicers fee is based upon the outstanding loan balance in the pool. C. The Servicer, typically a subsidiary of the Conspirator parent originator, therefore controlled by the Conspirator, has the power to significantly affect the cash flows to the investors because it controls the charge-offs and recoveries on the loans. D. Any income remaining after payments and expenses is usually accumulated to some extent in a reserve account which is returned to the depositor. E. The Servicer is required to report key information about the loans to the trustee.
F. According to the PSA (Pooling and Servicing Agreement), when a loans defaults the loss is absorbed first by the lowest most risky tranches, with the upper-level tranches remaining unaffected until losses exceed the entire amount of the subordinated tranches at which point the trust is dissolved and files a 15-15D report with the SEC indicating its probable dissolution. G. The lowest tranches, most exposed to payment risk, are retained by the Conspirator-owned Originator knowing that when the loans default, they will be first in line to collect CDS payments. H. The trustee, as alleged gate-keeper of the Trusts‘ assets, is part of the Conspirator-owned SPV, which is typically wholly owned by the Conspirator Originator.GAMING THE SYSTEM THE CONSPIRATORS CREATED A. The loans made to borrowers were packaged and/or sold to variety of Conspirator players, each earning a profit on each transaction. B. The prospectus was created, the MBS rated, and the investor‘s money pledged before the homeowner ever applied for a loan. C. Each MBS/Trust was required to keep a list of the individual loans they had allegedly recruited for the MBS. This list has to be publicly recorded with the SEC, however, the SEC did not require any proof that the loans actually existed or were possessed by the MBS. D. The underwriter earned a yield spread premium: the difference between what the interest rate the loan was sold for and the interest rate paid to the investors of the MBS‘s. E. The originator was simply the liaison between the borrower and the Investor and was paid a ―commission‖ when the depositor purchased the loan from the Sponsor. F. The Conspirators controlled the Servicer and designed the PSA to ensure that when a loan defaulted the Servicer would then ―advance‖ loan payments on behalf of the defaulted borrower. The Servicer‘s fee was based upon the outstanding balance of the pool, so if the loan was non-performing and the Servicer reported it as such, it would earn less money. G. Servicing rights are considered as assets with recognized value and called Mortgage Servicing Assets (MSA) which are sold, assigned, and securitized. H. A Master Mortgage Servicer receives a large fee called a service release premium (SRP) when it sells its servicing rights, thus this market is quite active. I. Additionally, the largest Servicers earn billions on late fees they frequently create through shenanigans.
J. The largest Servicers earn massive fees when a loan defaults: late fees, penalties, etc. Therefore, the longer the loan is in default, the Servicer accrues fees and interest payments which will be paid when the home is foreclosed. K. The Servicer doesnt care how much the foreclosed home sells for, as any amount which exceeds their expenses is pure profit.CREDIT DEFAULT SWAPS AKA ―OVER THE COUNTER (OTC) DERIVATIVES‖ 73. The ‗Atomic Bomb‘ of the Conspirators scheme, designed to catalyze the collapseof the economy and rob untold Trillions from the public, were the Credit Default Swap‘s,unregulated ―insurance‖ policies taken out on MBS bonds. Unlike a fire insurance policy whereonly one person can take a policy on property in the event of a loss, credit default swap―insurance‖ (more like a Las Vegas ―bet‖) could be sold to many gamblers. And this wasn‘t atrue bet, for the game was rigged. The data clearly indicates that the predatory loans sold tounsuspecting borrowers were designed to default. Therefore, the Conspirators only had to sitback and wait for the dollars to pour in while the economy collapsed piece by piece. 74. CDS‘s had little risk and great reward according to the 2011 Financial CrisisInquiry Commission Report: ―...entering into an equity swap that mimicked the returns of someone who owned the actual stock may have had some upfront costs, but the amount of collateral posted was much smaller than the upfront cost of purchasing the stock directly. Often no collateral was required at all. Traders could use derivatives to receive the same gains—or losses—as if they had bought the actual security, and with only a fraction of a buyer‘s initial financial outlay.‖ ―The credit default swap (CDS), offered the seller a little potential upside at the relatively small risk of a potentially large downside. The purchaser of a CDS transferred to the seller the default risk of an underlying debt. The CDS buyer made periodic payments to the seller during the life of the swap. In return, the seller offered protection against default or specified ―credit events‖ such as a partial default. If a credit event such as a default occurred, the CDS seller would typically pay the buyer the face value of the debt.‖ 75. CDS‘s were a zero-sum bet; for example, a bet on a MBS tranche that held $100million in mortgages would cost $200,000. for that ―policy.‖ Therefore, when a specificpercentage of mortgages in an MBS tranche defaulted, each policy holder would be paid $100Million! Obviously, the insurance company (AIG, for example) which sold the CDS‘s wouldhave to have enough money to pay off the $100 Million to each party who placed a bet which
required that the insurance companies have enough liquidity to pay off the bets. A largepercentage of defaults could easily bankrupt the ―insurance‖ company, for by 2008 thederivatives market had ballooned to $45 trillion - the reason insurance giant AIG would havebeen bankrupt it were not bailed out at the Conspirators behest. What we have learned today isthat the bailout money was used to pay off the bets taken by the Conspirators at 100 cents on thedollar! On page 347 of the 2011 Financial Crisis Inquiry Commission Report, it was stated: ―On September 2, 2008 the New York Fed‘s Danielle Vicente noted: ‗AIG‘s current liquidity position is precarious and asset liability management appears inadequate given the substantial off balance sheet liquidity needs.‘ Liquidating an $835 billion securities portfolio to cover liabilities [CDS‘s] would mean substantial losses and ―potentially‖ affect prices, she wrote. Borrowing against AIG‘s securities through the Fed‘s PDCF (New York Fed: The Primary Dealer Credit Facility (PDCF) is an overnight loan facility that will provide funding to primary dealers in exchange for any tri-party-eligible collateral and is intended to foster the functioning of financial markets more generally.) might allow AIG to unwind its positions calmly while satisfying immediate cash needs, but Vicente questioned whether the PDCF was ―necessary for the survival of the firm.‘ Arguably, however, AIG‘s volatile funding sources made the firm vulnerable to runs. Off-balance-sheet commitments—including collateral calls, contract terminations, and liquidity puts—could be as high as $33 billion if AIG was downgraded. Yet AIG had only $4 billion of revolving credit facilities in addition to the $12 to $13 billion of cash it had on hand at the time. Analysts worried about the losses in AIG‘s credit default swaps and investment portfolios, about rating agency actions, and about subsequent impacts on capital.‖ 76. In another excerpt from the 2011 Financial Crisis Inquiry Commission Report itwas stated: ―Credit default swaps (CDS)—fueled the mortgage securitization pipeline. CDS’s were sold to investors to protect against the default or decline in value of mortgage-related securities backed by risky loans. Companies ―sold protection‖— to the tune of $79 billion, in AIG‘s case... helping to launch and expand the market and, in turn, to further fuel the housing bubble.‖ 77. To create the circumstance of an economic death spiral and thus collect Trillionson the credit default swap ―bets‖ the Conspirators placed, it was imperative that the loans default.Moreover, because credit default swaps were integral to the success of the Conspirators scheme,all obstacles which could derail the success of the scheme had to be eliminated.ELIMINATING THE OBSTACLES
78. One obstacle that could potentially deride the Conspirators‘ scheme wasBrooksley Born, Chairman of the Commodity Futures Trading Commission (―CFTC‖), thefederal agency which oversees the futures and commodity options markets. A lauded brilliantattorney and expert in the field of derivatives, (MBS) Ms. Born analyzed the potential risk of theunregulated derivative market and became alarmed for she had the moxie to understand thatsomething major was awry. She then called Alan Greenspan, Chairman of the Federal Reserve ofthe United States from 1987 to 2006, who became surprisingly angry with her for recognizingthis fact. Shaken, but undaunted, and fueled by her conviction to protect the American people,she lobbied Congress and President Clinton in 1998 in an effort to regulate these derivatives andprotect the American economy. 79. However, in Congressional hearings, Conspirators, Alan Greenspan, LarrySummers, Secretary of the Treasury from 1999 to 2001, and Robert Rubin, Secretary of theTreasury from 1995 to 1999, all of whom who you would think would want to protect the public,instead fought hard to keep derivatives unregulated and when challenged, displayed a thenperplexing contempt for Ms. Born as each vehemently opposed her warnings collectively stating:―We have grave concerns about this action and its possible consequences. . . . We are veryconcerned about reports that the CFTC‘s action may increase the legal uncertainty concerningcertain types of ―over-the-counter‖ (OTC) derivatives.*‖ [*credit default swaps] In a revealingirrational display of emotion shown in the Oscar-winning documentary ―Inside Job”, theseTitans of Wall Street accused Ms. Born of wanting to bring the economy of the United Statesdown, rather than trying to protect it! Alan Greenspan stated: “Aside from safety and soundnessregulation of derivatives dealers under the banking and securities laws, regulation of derivativestransactions that are privately negotiated by professionals, is unnecessary.” 80. In September of 1998, Greenspan had changed his tune. The Federal ReserveBank of New York orchestrated a $3.6 billion recapitalization of Long-Term CapitalManagement (LTCM) by 14 major OTC derivatives dealers. LTCM, an enormous hedge fund,had amassed more than $1 trillion of exposure in derivatives and $125 billion of securities on amere $4.8 billion of capital without the knowledge of federal regulators. Greenspan thenrevealed that there was enormous risk posed by unregulated derivatives and testified toCongress that in the New York Fed‘s judgment, LTCM‘s failure would potentially have had
systemic effects: a default by LTCM ―would not only have a significant distorting impact onmarket prices but also in the process could produce large losses, or worse, for a number ofcreditors and counter-parties, and for other market participants who were not directly involvedwith LTCM.‖ 81. Despite those premonitions, in December 2000, the Conspirator-controlledCongress passed the Commodity Futures Modernization Act of 2000 (CFMA), which shieldedcredit default swaps from virtually all regulation or oversight by both the CFTC and the SEC.According to the 2011 Financial Crisis Inquiry Commission Report: ―The enactment of legislation in 2000 to ban the regulation by both the federal and state governments of over-the-counter (OTC) derivatives was a key turning point in the march toward the financial crisis.‖EXPANDING THE CREDIT DEFAULT MARKET 82. At year-end 2000, when the Commodity Futures Modernization Act law waspassed by Congress, the global exposure to these outstanding bets was $95.2 trillion, meaningthat when the mortgages defaulted, the amount of money required to pay off the bet was $3.2Trillion. In June 2008 when the market peaked, this exposure increased sevenfold to $672.6trillion; with a gross market value of $20.3 Trillion, and in March 2012 stands at $707 Trillionwith $34.9 Trillion in CDS‘s. 83. In the aftermath of the economic crisis, Conspirator Greenspan testified to theFCIC that credit default swaps—a small part of the market when Congress discussed regulatingderivatives in the 1990‘s —―did create problems‖ during the financial crisis. Conspirator LarrySummers testified that ―the derivatives that proved to be by far the most serious, [were] thoseassociated with credit default swaps [which] increased 100 fold between 2000 and 2008.‖ 84. If the laws and Congress are indeed intended to protect the public and our societyfrom potential harm, the irrational, illogical steps which took place paved the way for thederivative market to grow exponentially, thus increasing risk exponentially. But theConspirator-owned Congress passed Laws which allowed banks and hedge funds to hold lesscapital in reserve against their exposure to losses if they purchased derivatives. Additionally, tofurther inflate the MBS market, the cost on these ―bets‖ was low.
85. According to a class action Federal RICO lawsuit filed in October 2010 inKentucky (Foster v. Mortgage Electronic Registration Systems Inc., 10-cv-611):The Double and Triple Dip and Derivative Contracts: ―Many of the MBS/Trusts were covered by an insurance policy, commonly referred to as a Derivative or Collateral Contract. These Derivative Contracts are not recorded or regulated by the SEC. Upon information and belief, the Defendants have attempted to receive distribution, fees or proceeds or have received distributions from the liquidation of the borrower‘s homes, when the actual beneficiaries under the homeowners‘ loans, the shareholder/investors have been made whole by a Derivative Contract. In other instances, the MBS has been ―closed‖ months or years prior. Funds collected from the loans allegedly within the MBS, are no longer being paid to the investors, but are an unearned windfall to the servicer. Additionally, there is no contract between the investors and the foreclosing entity which would allow them so act as a Plaintiff in a Foreclosure even when the MBS is not shut down. Likewise, the MBS/Trusts themselves became parties to Derivative Contracts. Most times, the actual Derivative contract is for more, up to ten times (10x), the face value of the MBS. More often than not, multiple insurance policies were taken and traded on the MBS. The ―double dip‖ or double compensation of the MBS/Trustee, or Servicer is improper in its own right. The offense is patently egregious when it is viewed in light of the fact that the Servicer has no standing to foreclose, yet they came and continue to come to the Courts with the fabricated and forged documents.‖TOO BIG TO FAIL 86. To ensure the collapse of the economy, the Conspirators had to make sure that thebanks and institutions were so critical to the financial infrastructure of the American economy(and the world), that a failure would have dramatic, far-reaching consequences, therefore theseinstitutions had to be ―too big to fail‖ and thereby ―rescued‖ by the government. Hence, for the10 years prior to the ―crash,‖ numerous mergers had taken place with larger banks gobbling upthe smaller banks thus rendering them as ‗too big to fail.‘ 87. In the aftermath of the ―crash‖ the Conspirator-owned largest banks haveconsolidated the banks which intentionally failed so they could create even larger institutionswhich would then be capable of controlling the world‘s monetary system. These Conspirator-owned institutions bought the banks which failed for pennies on the dollar. Washington Mutualhad $307 Billion in assets, but was acquired by Chase for a mere $1.9 Billion, with the officers
of the failing banks retaining their multi-Million bonuses and golden parachutes in exchange fortheir Oscar-winning performances where they acted as if they knew nothing.MERS: THE SECRETIVE VEIL WHICH CONCEALS INSIDER FRAUD 88. To deceive the public and the courts for as long as they possibly could, theConspirators devised a secretive veil to hide their crimes. That smokescreen was the MortgageElectronic Registration System, or MERS, a privately held corporation created in 1998 by theConspirators. MERS was established to circumvent the lawful requirement to record alldocuments pertaining to the beneficial ownership of real estate at the county level. And theConspirators brazenly created this new entity without going through the legislative process. 89. MERS undermines and eviscerates long-standing principles of real property law,such as the requirement that any person or entity who seeks to foreclose upon a parcel of realproperty: 1) be in possession of the original note, 2) Have a publicly recorded mortgage in thename of the party for whom the underlying debt is actually owed and who is the holder of theoriginal Promissory Note with legally binding assignments and 3) possess a written assignmentgiving he, she or it actual rights to the payments due from the borrower pursuant to both themortgage and note. 90. Most important, MERS operates ―in the dark‖ thus allowing the Conspirators toconceal numerous violations of the law which could later be used as evidence of their scheme.Among those violations is having the ability to repeatedly sell and assign borrowers promissorynotes this making even more money the Conspirators used the cover of mers to make it possibleto sell these mortgage notes to multiple MBS pools to make even more money! 91. MERS does not share their registry with anyone and therefore, it has created ashadow or false registry. Because MERS and the Conspirator-owned banks refuse to share thechain of title with any entity, they have the ability to create any document they want.BRIBING THE RATINGS AGENCIES 92. Large institutional investors have restrictions placed upon them and can onlyinvest in AAA-rated low risk investments, so according to the Oscar-winning documentary
―Inside Job,‖ and Michael Lewis‘ ―The Big Short‖, the Conspirators simply paid the Ratingsagencies, Moody‘s, Fitch and Standard and Poors, millions of dollars in ―bribes.‖ TheConspirators singled out the ‗best and brightest‘ employees of the ratings agencies and if thesepeople produced favorable ratings for the MBS‘s, they were offered extremely well-paying jobs.Thus, there was a built-in bias to rate the MBS pools favorably despite contrary data emanatingfrom multiple sources which indicated that sub-prime MBS‘s were indeed an extremely high-riskinvestment and contained mortgages which were so bad that they were guaranteed to fail. 93. The majority of MBS were rated ―AAA‖ by Moody‘s or Standard & Poors inorder to invoke a sense of confidence to the investors. The rating agencies, currently underinvestigation by the Justice Department for their role in the financial meltdown, were controlledby the Conspirators. The Underwriter/salesman of the Conspirator-owned banks hired andcompensated the ratings agencies.GETTING RID OF TROUBLESOME REGULATORS 94. To ensure that potentially problematic regulators would not have the ability touncover the Conspirator‘s scheme, according to the Oscar-winning documentary ―Inside Job,‖the Conspirator-controlled Congress quickly passed legislation to cut the Enforcement Divisionof the SEC from 146 regulators to 1 lone regulator who remained on staff. 95. The Conspiracy and its Conspirators extended to other countries including PrimeMinister Tony Blair of Great Britain. Economist Charles Kadlec wrote in The Daily Reckoning: ―As former Prime Minister Tony Blair writes in his memoir, A Journey of My Political Life, an important contributor to the financial crisis was a failure ―of understanding. We didn‘t spot it...it wasn‘t that we were powerless to prevent it even if we had seen it coming; it wasn‘t a failure of regulation in the sense that we lacked the power to intervene. Had regulators said to the leaders that a huge crisis was about to break, we wouldn‘t have said: There‘s nothing we can do about it until we get more regulation through. We would have acted. But they didn‘t say that.‖ACCOUNTING‘S ROLE IN THE FRAUD 96. The governing documents for the MBS Trusts specify distinct rules (the PSA) forloans in default and how they are to be removed or traded out. Non-performing loans are not