By: elvis-is-here RB post: interesting & good read

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By: elvis-is-here
04 Oct 2010, 02:25 PM EDT
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DTCC - Wall Street's Untouchable Bookie



Introduction

If my hunch is right, you're going to be hearing a lot about naked short selling in the coming weeks. That's because Rolling Stone is about to release a new article by Matt Taibbi on this controversial subject. And hopefully all that buzz will shed some light on one of Wall Street's most shadowy institutions - the DTCC (Depository Trust & Clearing Corporation). Read on!

[UPDATE] Here's a preview of Taibbi's upcoming article courtesy of the gang of idiots on MSNBC's Morning Joe. (BTW, how is it that racist Pat Buchanan is still allowed to appear on nationwide TV?)



Beware the Ides of March

As usual my best stories are the ones that I stumble upon accidentally. I was trying to find out if anyone had posted online excerpts from Matt Taibbi's latest Rolling Stone article titled "Wall Street's Naked Swindle". (OK, I wouldn't have been disappointed to find someone had uploaded the whole story, but so far that hasn't happened as far as Google knows. Maybe that's because the November issue of Rolling Stone hasn't hit the newsstands yet.)

I eventually found some excerpts on a site called Deep Capture. That wasn't too surprising because this site is well known for its battle against naked short selling, which is also the topic of Taibbi's latest article. For your benefit here's the link and an extended excerpt from the article.

Taibbi writes:

“On Tuesday, March 11th, 2008, somebody – nobody knows who – made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half of their value in nine days or less. It was madness – “like buying 1.7 million lottery tickets,” according to one financial analyst.”

Bear’s stock would have to drop by more than half in a matter of days for the mystery figure to make a profit. And that is what happened.

As Taibbi explains, “the very next day, March 12, Bear went into a free fall…Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a ##### ever or…Or what?”

Taibbi speculates (as has Deep Capture) that these options might have been purchased by somebody who was abusing the options market maker exemption to engage in illegal naked short selling. And Taibbi goes beyond speculation to state, as an obvious fact, that illegal naked short selling helped bring Bear Stearns to its knees.

Presumably operating under that assumption, the SEC issued more than 50 subpoenas to Wall Street firms in the wake of Bear’s collapse, but “it has yet to indentify the mysterious trader who somehow seemed to know in advance that one of the five largest investment banks in America was going to completely tank in matter of days.”

Taibbi continues: “The SEC’s halfhearted oversight didn’t go unnoticed by the market. Six months after Bear was eaten by predators, virtually the same scenario repeated itself in the case of Lehman Brothers – another top-five investment bank that in September 2008 was vaporized in an obvious case of [naked short sellers engaging in] market manipulation. From there, the financial crisis was on, and the global economy went into full-blow crater mode.”

What caught my attention was the March 11th date that Taibbi highlighted as the day the crazy $1.7 million option "bet" was placed. This is the same date Goldman Sachs sent out a killer memo saying that Goldman would no longer honor counterparty claims from Bear Stearns as I pointed out in my article "How Goldman Sachs whacked Bear Stearns".

That morning Goldman Sachs's credit derivatives group sent its hedge fund clients an e-mail announcing another blow [...] on March 11, Goldman told clients it would no longer step in for them on Bear derivatives deals.
[...]
"Goldman told Wall Street that they were done with Bear, that there was [effectively] too much risk. That was the end for them."

I speculate in my article that this may very well have been the fatal blow that led to the demise of Bear Stearns. So lets assume that whoever took out the options knew that the GS memo was going to come out the very same day. Then it's not such a "crazy" bet after all.

Virtual Spy vs. Spy

But that's just the beginning of this story - as if that wasn't enough - because things got really interesting when I decided to catch up on the latest stories from Deep Capture. One story captured my attention. [Pun intended.]

The title of the story was innocuous enough, "The Register weighs in on our crusade". The write up hinted at a strange game of cat and mouse played in the virtual world of the world wide web, so I decided to take a look at the Register article that was mentioned.

The main story was intriguing enough, a security hole in the Yahoo message boards that allowed someone to insert javascript into the comments which could then be used to trace the IP of people posting messages, but the real jewel was contained in the last paragraph of the story.

A single Wikipedia edit links the Mantanmoreland account to a PC inside the Depository Trust & Clearing Corporation (DTCC). Owned by Wall Street investment banks that may have benefited from naked shorting schemes, the DTCC oversees the delivery of stocks on Wall Street. In other words, it is in a prime position to observe abusive naked shorting schemes. DTCC denies it has ever had any involvement with Gary Weiss.

Now if you've read my article "Phantoms of the Stock Market", you will understand my excitement at finding this link. The DTCC (Depository Trust & Clearing Corporation) is the key IMHO to unlocking the fraud that goes on in Wall St. Why? Because DTCC is the bookie for the banksters!

Remember how the feds finally took down Al Capone by getting hold of his books and charging him with avoiding paying Federal Income Taxes? The DTCC has all the records on naked short selling, but it's a private corporation owned by the Wall St. banks. You know, the very same banks that own that other "private corporation"that Ron Paul keeps trying to audit - The Federal Reserve. Maybe Ron Paul should shift his attention to auditing the DTCC, because that's where the bodies are buried.

OK, I got a little ahead of myself, so let me do some backtracking at this point.

Who is Gary Weiss?

This whole case revolves around the figure of Gary Weiss. So, who is he and why should we care? Well if your Patrick Byrne of Deep Capture you care a lot. It turns out that Gary Weiss has been hiding behind various internet aliases to attack Byrne and defame him. That's what he discovered once his associate, Judd Bagley, uncovered the IP that was placing fake posts in the Yahoo financial boards.

Gary Weiss it turns out has been leading a one man campaign against anyone who dares to question the validity of naked short selling. He has been hiding behind various internet alibis in order to maximize the impact of this campaign. You can get all the sordid details at Judd Bagley's blog if your really interested, so I won't repeat them here.

Where it gets interesting is that Gary Weiss has now been linked to the DTCC. So the question naturally arises - what's the nature of the relationship between Weiss and the DTCC? To put it more bluntly - is Weiss being paid by the DTCC to slander anyone that attacks the validity of naked short selling? Is Weiss a Hit Man for the DTCC?

Weiss goes after corruption on Wall St. - of the Italian variety

Weiss wrote an article back in December 1996 which appeared in Business Week titled "The Mob on Wall Street". Now with all the talk of Wall St. banksters these days, a title like this would be par for the course if written today. And you might think that the article would start with pictures of Hank Paulson, Ben Bernanke and Goldman Sachs CEO Lloyd Blankfein.

But this article was written back in 1996. Back in the 90s greed was still good. And the mob that Weiss was referring to was actually the Italian Mafia. It seems that the Mafia was moving in on the traditional Wall St. Bankers turf - and they didn't like it.

Along comes Gary Weiss to out the Mafiosos on Wall Street. Now I'm not taking sides, but it seems to me that this is a typical case of a criminal gang turf war. One side outs the other to the authorities and comes out the winner. It reminds me of the case in Boston where Whitey Bulger's Irish Mob outed the local Mafia to the FBI, while gaining the protection of the FBI to conduct their own criminal enterprise - including engaging in murder.

Was this the beginning of a new career for Gary Weiss as an economic Hit Man for hire? Weiss followed up his 1996 article with a book in 2003 titled "Born to Steal", with the subtitle of "When the Mafia Hit Wall Street". You get the picture.

With all of that interest in dirty dealing on Wall Street, how did Weiss miss a big fish like Bernie Madoff? Could it be because Madoff wasn't Italian enough? As Gerald Celente has frequently commented... if the names of the people on Wall St. were all Italian, we would immediately say that the Mafia has taken over Wall Street and insist that the government begin a criminal investigation. But because the names are Paulson, Geithner, Bernanke the public somehow assumes that there is not a criminal operation going on.

Look, organized crime is a organized crime! It shouldn't matter whether the names of the people involved are Luciano or Lansky. Nobody should get a free pass to rob the American people.

Weiss and the DTCC

The DTCC "denies it has ever had any involvement with Gary Weiss". But that just doesn't jibe with the pattern of coordinated attacks by Weiss and the DTCC on outspoken critics of the practice of naked short selling. Again, the authority on this subject is Judd Bagley of Deep Capture.

Possibly the biggest single “a-ha!” moment I’ve had while writing this blog came in late January of 2007, when I discovered that one week earlier, Gary Weiss had edited Wikipedia while logged in to a computer on the network of the Depository Trust & Clearing Corporation (DTCC).
[...]
This may not seem like a big deal to most, but it turned out to be a huge deal to those of us who had spent a full year enduring Weiss’s attacks without any clear understanding of his motivation.

We knew his aim was to discredit and marginalize high profile opponents of illegal naked short selling. Yet his book, which seemed to be the launch pad of Weiss’s campaign, was quite critical of both hedge fund and prime broker culture: the two obvious sides of the naked shorting equation.

So who was paying Weiss to spend all day, most every day, publishing his attacks via his blog, message boards, and Wikipedia?

Nobody had ever considered the DTCC.

But once we knew Weiss had used a DTCC computer – given the uniquely Fort Knox-like nature of the institution, and the fact that it could not have happened unless Weiss had official access – everything fell into place.

Suddenly, we noticed a very striking set of coincidences, commencing January 22, 2006.

You can read Bagley's whole account in an article titled "Gary Weiss: his DTCC ties and lies". The evidence is pretty convincing to me.

DTCC - Wall Street's bookie

Lately there's been a lot of talk about auditing the Fed. But the Fed is an open book compared to the shadowy DTCC. The Fed at least has some responsibility to go before Congress periodically and report on its activities. The DTCC in contrast answers to no one but the cabal of Wall Street banks that own it.

Now one of the unanswered questions about the Lehman Brothers meltdown that rocked the financial world in September 2008 is the amount of outstanding obligations that Lehman owed to the world's financial institutions. Just look at the way that the collapse of Bernie Madoff's Ponzi scheme wreaked havoc on various individuals and institutions. Its fair to say that Lehman had an exponentially much larger effect on the world markets.

This gets further complicated by the use of CDS (Credit Default Swaps). And who keeps track of CDS transactions in the US? Well none other than the DTCC. So DTCC knows where the bodies are buried. Maybe that's why the Department of Justice recently subpoenaed the DTCC in regards to an investigation into the Credit Default Swap market.

And then there is the whole issue of naked short selling and the role that it played in the downfall of Lehman Brothers. Again, the DTCC is Wall Street's bookie for tracking stock transactions. And they have the records of who exactly was perpetrating the massive naked short selling of Lehman that accompanied its downfall. According to Bloomberg, "as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11". And yet the DTCC has never been required to account for these huge discrepancies that occurred in unison with the collapse of Lehman.

If the Wall Street Bankers are the equivalent of a serial murderer, then DTCC is the equivalent of the Hudson River where the bodies are dumped. So why aren't the authorities dredging DTCC's records for criminal evidence. Maybe because the so-called authorities such as the Fed, the Treasury Departmenat and the SEC are all part of the criminal conspiracy. And Congress, well they've been bought off or intimidated into silence.

America is one big mob controlled town. Where's Eliot Ness when you need him?

futurenewstoday.blogspot.com/2009/10/dtcc-wall-streets-untouchable-bookie.html

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ty reubens

[sandi66]

By: elvis-is-here
08 Oct 2010, 12:59 PM EDT
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FORECLOSURE GATE & OBAMA’S “POCKET VETO”
DC News Media Asleep
How Wall Street & Big Banks almost rammed through Congress another blow to the working class

By Ellen Brown
October 08, 2010

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News, Analysis, Opinion

(NATIONAL) -- Amid a snowballing foreclosure fraud crisis, President Obama Thursday blocked legislation that critics say could have made it more difficult for homeowners to challenge foreclosure proceedings against them.

The bill passed the Senate with unanimous consent and with no scrutiny by the DC media.

In a maneuver known as a "pocket veto," President Obama indirectly vetoed the legislation by declining to sign the bill passed by Congress while legislators are on recess.

The White House issued a statement regarding the veto, citing the need for "further deliberations on the intended and unintended impact of [the] bill on consumer protections, including mortgages, before this bill can be finalized."

The swift passage and the president's subsequent veto of this bill come on the heels of an announcement that Wall Street banks are voluntarily suspending foreclosure proceedings in 23 states.

By most reports, it would appear that the voluntary suspension of foreclosures is underway to review simple, careless, procedural errors - errors which the conscientious banks are hastening to correct. Even Gretchen Morgenson in The New York Times characterizes the problem as "flawed paperwork."

FLAWED PAPERWORK? HOW ABOUT FRAUD?

However, those errors go far deeper than mere sloppiness; they are concealing a massive fraud. They cannot be corrected with legitimate paperwork, and that was the reason the servicers had to hire "foreclosure mills" to fabricate the documents.

These errors involve perjury and forgery - fabricating documents that never existed and swearing to the accuracy of facts not known.

Karl Denninger at MarketTicker is calling it "Foreclosuregate." Diana Ollick of CNBC calls it "the RoboSigning Scandal." On Monday, Ollick reported rumors that the government is planning a 90-day foreclosure moratorium to deal with the problem.

Three large mortgage issuers - JPMorgan Chase, Bank of America and GMAC - have voluntarily suspended thousands of foreclosures, and a number of calls have been made for investigations.

Ohio Attorney General Richard Cordray announced on Wednesday that he is filing suit against Ally Financial and GMAC for civil penalties up to $25,000 per violation for fraud in hundreds of foreclosure suits.

These problems cannot be swept under the rug as mere technicalities. They go to the heart of the securitization process itself. The snowball has just started to roll. ( Editor’s Note: Italics are ours)

YOU CAN’T RECOVER WHAT DOESN’T EXIST

Yves Smith of Naked Capitalism has uncovered a price list from a company called DocX that specializes in "document recovery solutions."

DocX is the technology platform used by Lender Processing Services to manage a national network of foreclosure mills.

The price list includes such things as "Create Missing Intervening Assignment," $35; "Cure Defective Assignment," $12.95; "Recreate Entire Collateral File," $95. Notes Smith:

“[C]reating ... means fabricating documents out of whole cloth, and look at the extent of the offerings. The collateral file is ALL the documents the trustee (or the custodian as an agent of the trustee) needs to have pursuant to its obligations under the pooling and servicing agreement on behalf of the mortgage backed security holder. This means most importantly the original of the note (the borrower IOU), copies of the mortgage (the lien on the property), the securitization agreement, and title insurance.”

How do you recreate the original note if you don't have it? And all for a flat fee, regardless of the particular facts or the supposed difficulty of digging them up.

All of the mortgages in question were "securitized" - turned into Mortgage Backed Securities (MBS) and sold off to investors.

MBS are typically pooled through a type of "special purpose vehicle" called a Real Estate Mortgage Investment Conduit or "REMIC," which has strict requirements defined under the US Internal Revenue Code (the Tax Reform Act of 1986).

The REMIC holds the mortgages in trust and issues securities representing an undivided interest in them.

Denninger explains that mortgages are pooled into REMIC Trusts as a tax avoidance measure, and that to qualify, the properties must be properly conveyed to the trustee of the REMIC in the year the MBS is set up, with all the paperwork necessary to show a complete chain of title.

For some reason, however, that was not done; and there is no legitimate way to create those conveyances now, because the time limit allowed under the Tax Code has passed. (Editor Note: bold emphasis is ours)

The question is, why weren't they done properly in the first place? Was it just haste and sloppiness as alleged?

Or was there some reason that these mortgages could NOT be assigned when the MBS were formed?

Denninger argues that it would not have been difficult to do it right from the beginning.

His theory is that documents were "lost" to avoid an audit, which would have revealed to investors that they had been sold a bill of goods - a package of toxic subprime loans very prone to default.

THE TRANCHE PROBLEM

Here is another possible explanation, constructed from an illuminating CNBC clip dated June 29, 2007.

In it, Steve Liesman describes how Wall Street turned bundles of subprime mortgages into triple-A investments, using the device called "tranches."

It's easier to follow if you watch the clip HERE (Editor’s Note: at time this story was posted YouTube said the video was not available) but this is an excerpt:

“How do you create a subprime derivative? ... You take a bunch of mortgages ... and put them into one big thing. We call it a Mortgage Backed Security. Say it's $50 million worth.... Now you take a bunch of these Mortgage Backed Securities and you put them into one very big thing.... The one thing about all these guys here [in the one very big thing] is that they're all subprime borrowers, their credit is bad or there's something about them that doesn't make it prime....

Watch, we're going to make some triple A paper out of this ... Now we have a $1 billion vehicle here. We're going to slice it up into five different pieces. Call them tranches.... The key is, they're not divided by "Jane's is here" and "Joe's is here." Jane is actually in all five pieces here. Because what we're doing is, the BBB tranche, they're going to take the first losses for whoever is in the pool, all the way up to about 8% of the losses.

What we're saying is, you've got losses in the thing, I'm going to take them and in return you're going to pay me a relatively high interest rate.... All the way up to triple A, where 24% of the losses are below that. Twenty-four percent have to go bad before they see any losses. Here's the magic as far as Wall Street's concerned. We have taken subprime paper and created GE quality paper out of it. We have a triple A tranche here.”

The top tranche is triple A because it includes the mortgages that did NOT default; but no one could know which those were until the defaults occurred, when the defaulting mortgages got assigned to the lower tranches and foreclosure went forward.

That could explain why the mortgages could not be assigned to the proper group of investors immediately: the homes only fell into their designated tranches when they went into default.

THE CLEVER DESIGNERS OF SMOKE AND MIRRORS

The clever designers of these vehicles tried to have it both ways by conveying the properties to an electronic dummy conduit called MERS (an acronym for Mortgage Electronic Registration Systems), which would hold them in the meantime.

MERS would then assign them to the proper tranche as the defaults occurred. But the rating agencies required that the conduit be "bankruptcy remote," which meant it could hold title to nothing; and courts have started to take notice of this defect.

They are concluding that if MERS owns nothing, it can assign nothing, and the chain of title has been irretrievably broken. As foreclosure expert Neil Garfield traces these developments:

“First they said it was MERS who was the lender. That clearly didn't work because MERS lent nothing, collected nothing and never had anything to do with the cash involved in the transaction. Then they started with the servicers who essentially met with the same problem.

Then they got cute and produced either the actual note, a copy of the note or a forged note, or an assignment or a fabricated assignment from a party who at best had dubious rights to ownership of the loan to another party who had equally dubious rights, neither of whom parted with any cash to fund either the loan or the transfer of the obligation.... Now the pretender lenders have come up with the idea that the "Trust" is the owner of the loan ... even though it is just a nominee (just like MERS).... They can't have it both ways.

My answer is really simple. The lender/creditor is the one who advanced cash to the borrower....The use of nominees or straw men doesn't mean they can be considered principals in the transaction any more than your depository bank is a principal to a transaction in which you buy and pay for something with a check.

SO, WHAT’S TO BE DONE?

Garfield's proposed solution is for the borrowers to track down the real lenders - the investors. He says:

”f you meet your Lender (investor), you can restructure the loan yourselves and then jointly go after the pretender lenders for all the money they received and didn't disclose as "agent."

Karl Denninger concurs. He writes:

“Those who bought MBS from institutions that improperly securitized this paper can and should sue the securitizers to well beyond the orbit of Mars.... f this bankrupts one or more large banking institutions, so be it. We now have "resolution authority," let's see it used.”

The resolution authority Denninger is referring to is in the new Banking Reform Bill, which gives federal regulators the power and responsibility to break up big banks when they pose a "grave risk" to the financial system - which is what we have here.

CNBC's Larry Kudlow calls it "the housing equivalent of the credit financial meltdown," something he says could "go on forever."

BIG BANKS MUST BE EXAMINED ON BANK "HOLIDAY"

Financial analyst Marshall Auerback suggests calling a bank holiday. He writes:

“Most major banks are insolvent and cannot (and should not) be saved. The best approach is something like a banking holiday for the largest 19 banks and shadow banks in which institutions are closed for a relatively brief period. Supervisors move in to assess problems.

It is essential that all big banks be examined during the "holiday" to uncover claims on one another. It is highly likely that supervisors will find that several trillions of dollars of bad assets will turn out to be claims big financial institutions have on one another (that is exactly what was found when AIG was examined - which is why the government bail-out of AIG led to side payments to the big banks and shadow banks).... By taking over and resolving the biggest 19 banks and netting claims, the collateral damage in the form of losses for other banks and shadow banks will be relatively small.”

What we need to avoid at all costs is "TARP II" - another bank bailout by the taxpayers.

No bank is too big to fail. The giant banks can be broken up and replaced with a network of publicly-owned banks and community banks, which could do a substantially better job of serving consumers and businesses than Wall Street is doing now.




Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In "Web of Debt," her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.”

She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back.

Her eleven books include “Forbidden Medicine, Nature’s Pharmacy” (co-authored with Dr. Lynne Walker), and “The Key to Ultimate Health” (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com, www.ellenbrown.com, and www.public-banking.com.


www.skyvalleychronicle.com/FEATURE-NEWS/I-Sky-Valley-Chronicle-Exclusive-I-br-FORECLOSURE-GATE-OBAMA-S-POCKET-VETO-br-DC-News-Media-Asleep-At-Wheel-br-How-Wall-Street-Big-Banks-almost-rammed-through-Congress-another-blow-to-working-class-folks-br-I-By-Ellen-Brown-br-News-Analys-486759 or tinyurl.com/2ck64fm

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