Big Bad Banks and the Government that Enabled Them

Big bad banks“They need to do a much better job on the basic management and operational side of their firms,” Mr. Barr said. “What we’ve been pushing the servicers to do is improve their infrastructure to make sure their call centers are doing a better job. The level of training is not there yet.”

–          Michael S. Barr, the assistant Treasury secretary for financial institutions, as quoted from the New York Times article, ‘Paper Avalanche Buries Plan to Stem Foreclosures’ on 6/28/09, discussing the banks’ loan modification efforts.

Most of us have a family member or friend that has experienced hard times.  You help them find a job, buy them a few meals, let them crash at your place for a while, and may even lend them some money.  But, at some point you realize two things:  (1) Perhaps it was their poor attitude and lack of organization that got them into this situation in the first place; (2) If I keep bailing them out what incentive do they have to clean up their act?  Then it dawns on you…you are an enabler.

That is the situation we find ourselves in today with banks like Wells Fargo, Bank of America (formerly Countrywide), and Citigroup.  By now you’re probably familiar with the bailout figures, published on Pro Publica’s website, ‘Eye on The Bailout’:

  • Bank of America        $52 Billion
  • Citigroup                      $50 Billion
  • Wells Fargo                 $25 Billion

Staggering numbers indeed…but, the enabling began long before the bailout took place.  This is an excerpt from a HUD urban policy brief written in 1995:

“At the request of President Clinton, the U.S. Department of Housing and Urban Development (HUD) is working with dozens of national leaders in government and the housing industry to implement the National Homeownership Strategy, an unprecedented public-private partnership to increase homeownership to a record-high level over the next 6 years.”

This National Homeownership Strategy initiative gave banks their green light to start lending to anyone with a pulse.  And, the incomprehensible part is the amount of greed and corruption that took place in the years that followed.

“Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”

–          Beth Jacobson, former loan officer at Wells Fargo Bank discussing marketing practices in ‘Bank Accused of Pushing Mortgage Deals on Blacks’ from the New York Times on 6/6/09

Wells Fargo is now being sued by the city of Baltimore and the N.A.A.C.P.  However, they’re not alone.  Last month, the SEC filed a lawsuit against the former CEO of Countrywide for civil fraud.

sink or swimSo the notion that the banks and government working together, or against each other, will save us is seriously flawed.  They should both be held equally accountable for creating this mess, for sure.  But, it’s time to cut ties.  Let the banks sink or swim.  No more free rides.  It’s time to stop the enabling.

And come to think of it…it’s time to kick my brother off the couch.



Filed under Homeownership

3 responses to “Big Bad Banks and the Government that Enabled Them

  1. It is incredible to see just how out of touch our main stream media is.

    I have been researching the Mortgage predatory lending market for some time now, gathering a whole bunch of dirt on Angelo Mozilo, David Sambol, Kurland and others at Countrywide Home Loans. I uncovered more than a little dirt on Bank of America and its CEO Kenneth Lewis. But what moved me the most was coming across this Lone Ranger like character named David Merritt.

    This is a guy who got suckered into one of those Countrywide Predatory loans. He and his wife are first time home buyers who wanted to put 5 to 10 % down on their $729,000 home in Silicon Valley California – 2 miles from Yahoo headquarters, 4 from google and 5 from Apple.

    With just 2 days to remove their loan contingency, and with at least two other lenders ready to sell them a relatively decent mortgage, Countrywide talked them out of going with the competition by presenting a 1 to 3 percent, FHA Good Faith Estimate and declared: “if you can find someone to beat this loan, then go with them and we’ll pay the closing costs.”

    Countrywide staff were trained on how to determine how much knowledge a home buyer had, and they knew that the Merritts were suckers to be taken. Once they fired the other lenders and committed themselves to Countrywide, the Merritts found themselves locked into a 100% financing Pay Option ARM and HELOC which was destined to charged them over 2 million dollars. Countrywide had a policy of talking buyers out of putting down payments, and convincing them that they would give them a loan that was better. In fact, they would always tell home buyers that No One Could beat them and the truth was that they did beat everyone at the application stage in order to remove all the competition, but they left out that by the time the home buyer was closing escrow, most competitors would have done better.

    The Merritts signed a loan that was charging twice as much as the average lender. What is more is that they signed a loan which Countrywide assigned Mortgage Electronic Registration System as a lender. As it turns out, MERS was designed to be a front company which allows: 1) Note holders to hide from public scrutiny; 2) the duplication of one loan note that could be sold off to 2 or more investors or mortgage backed security pools: 3) evasion of paying local recorder fees; 4) Overriding state legislatures recording the laws on recording liens, beneficiaries and holders in due course; 5) attacking Public Policy in regards to its goals of protecting consumers and lenders from fraud via recording laws; and last, but not least, 6) being a conduit for billions of dollars to pass right by Uncle Sam and into Cayman or Canadian banks where no federal taxes can touch it.

    This is how Countrywide rose to the top. And they intentionally targeted elderly, minorities and unsophisticated first time buyers.

    Now in July 2008 Bank of America bought Countrywide out for 2 billion dollars. A company with assets that exceeded 20 billion, and servicing machine that churned out billions more.

    Bank of America went to all the states Attorneys Generals and asked them to bring lawsuits on behalf of their state citizens against Countrywide and to already agree to cut a sweet settlement deal with Bank of America. This was a strategy to persuade that Public that BofA was sincere about cleaning up the mess Mozilo and cronies created. But what is left out is that they are also trying to cut off home buyers ability to charge BofA with the predatory loans of Countrywide.

    Behind the scenes, BofA has been supporting Countrywide since 1969. It has always been in the predatory loan business, but through other front companies. For the longest, evidence shows, Kenneth Lewis was very close allies with Mozilo and planned with him to defraud Americans out of their home equity.

    It is so strange to see so many Americans enslaved to the Banking and Finance gangsters and not even know it, or if they do, just accept it.

    David Merritt is literally one of the 21st Century modern epics “David versus Goliath.” And all the has is a little sling and a rock against Goliaths billion dollar war armor. Check out some of his thoughts on many issues at, but the 9th Circuit Court of Appeals has before it Merritt v. Countrywide, BofA, Wells Fargo et al, Docket No 09-17678 where he has charged straight at these Greedsters with RICO and other federal violation. And in Santa Clara Superior Court Merritt v. Mozilo et al No. 109CV159993.

    He is actually looking for other victims who have deeds of trust assigned to MERS and he wishes to help in anyway possible to fight these folks offensively , he prefers, but he has enough information to help defensively as well. Lawyers from around the country taps into this Big David. So circulate the word.

    Mark Doyle

  2. freerealestateeducation


    If you check out my News tab you will see it is full of articles about banks and the outrageous and unethical practices they engaged in during the real estate boom. Countrywide, Bank of America and Wells Fargo all made headlines for the wrong reasons, then were bailed out by the federal government. Bank of America was the biggest winner, receiving $50 billion to keep its doors open. Wells Fargo got $25 billion.

    Thanks for reading.


  3. Pingback: Big Bad Banks and the Government that Enabled Them « Free Real … | Home Lender Offer

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