Francine McKenna, writing for the American Banker, thinks that some big time gangbanksters may finally be called to account soon.

I think the Obama administration will pull Jamie Dimon down along with Jon Corzine.

They’ll do this to regain momentum with working-class voters—the 99%. Winning the November election, less than a year away, will require a significant show of prosecutorial force against banks and senior executives yet to be held accountable for the impact of the financial crisis on the middle class.

Bankers Facing Hard Time (Source: Star-Tribune)

Jamie Dimon will have the misfortune, I believe, of catching a significant amount of fallout from the MF Global mess. As MF Global’s primary banker, JPMorgan Chase has been consistently accused in the media and by the attorney representing a customer coalition of taking advantage of the firm’s vulnerable financial state. Bloomberg News reported that the MF Global trustee said “certain” actions of JP Morgan Chase “are likely to be the subject of investigation.”

Dimon’s bank was also Bernie Madoff’s main bank.

via JPM Chief Executive Jamie Dimon Will Have His Comeuppance in 2012 – Bank Think Article – American Banker.

So you think the Obama administration will finally prosecute the big mahoffs in the massive banking control fraud that brought down the US and world financial system, and put the US taxpayer on the hook for trillions in losses, past, present, and yet to come?

From your mouth to God’s ear, lady.

And you know what, the Obama administration might just be cynical enough to hold off on announcing dozens of indictments until a few weeks before the election, then claim with a straight face that, “Politics has absolutely nothing to do with the timing of the indictment. These were lengthy, detailed and complicated investigations, in which the alleged perpetrators engaged in stonewalling and endless delay in producing documents, etc. The indictments were brought as quickly as possible. And furthermore, what good would it do to wait until after the election.”

Oh wait, they’ll leave that last sentence out. Sorry.

And won’t that put the R crowd in a terrible predicament on the eve of the election.

I’m sure their political strategists are gaming this situation and their response right now.

Let’s see, what can they say?

Uh… “This was a blatantly political indictment and these guys are innocent and it’s an attack on the free market?”

Or  ”This was a blatantly political indictment and should have been brought years ago instead of now?”

Uh… No.

OK, how about, “This was a blatantly political indictment and should have been held until after the election.”

Nah, I don’t think that will fly either.

I think the idea that Obama’s Justice Department under the Attorney General Dick Holder will ever indict any of these major corporate executive campaign donors, is a pipedream.

But we can still believe in justice, can’t we? After all this is America, where truth and justice are the American way. Or at least, they were once.

Follow @Lee_Adler

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I have long made the argument that shadow inventory is a bogeyman which, like shadow boxing, won’t hurt anyone, or at least won’t hurt the housing market in most areas, more than it already has. In effect it’s a sunk cost heavily affecting particular local markets, but will not affect the majority of the US where housing has stabilized. This article is an example of why that is.

Actually the conclusion of the headline is wrong. The fact that the banks refuse to recognize these losses on their balance sheet is bad for them, for the financial system, and especially for the US taxpayer, who stands behind Fannie and Freddie, who stands behind most of the failed, and mostly worthless, loans.

Neighborhoods crumble as thousands of homes sit in legal limbo, Sun Sentinel finds

By Megan O’Matz and John Maines, Sun Sentinel

April 29, 2012

Banks that made reckless home loans have been tiptoeing away from foreclosures in a tactic designed to cut their losses. The result: Orphaned, dilapidated homes dot the landscape from Kendall to Lake Worth.

There are no owners willing to claim and care for them.

A months-long Sun Sentinel investigation of property code violations involving abandoned homes uncovered case after case in which banks launched foreclosure lawsuits but then stalled or avoided taking ownership. In effect, the banks legally sidestepped responsibility for the empty homes, causing great harm to neighborhoods.

via Bad Neighbor Banks: Homes toxic for neighbors, good for lenders – South Florida Sun-Sentinel.com.

Get regular updates on the US housing market, and stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd. Click this link and begin your risk free trial NOW!

Listing prices posted a second month of gains in April. This appears to be seasonal.

Housing demand correlates directly with employment and the economy gained jobs in April. The gains appear to be slowing however, and that’s bad news for the future trend. When all the stimulus and Fed pumping ends, it looks like the typical summer seasonal peak in house prices will fall well short of last year’s level. That could lead to a new low in prices later in the year, which would be very bad news for the state of mortgage collateral, and for therefore for the financial system and the economy. Keep in mind that the US taxpayer is on the hook for Fannie and Freddie’s losses, and that will be a drain on the system for years to come.

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Notes: 1) The US taxpayer is on the hook for any of these that are bad (right? I can’t keep straight which of these deals we’re acting as backup for).

2) Countrywide = Mozillo = the guy who just happened to stroll into the room when the CHAIRMAN OF THE SENATE BANKING COMMITTEE called ‘a friend’ at Countrywide to see if he could get a good deal on a refi. Why isn’t this on the evening news?! Why aren’t these people in jail?! I seriously am worried about the world I am leaving my kids. Is this how it felt, as Europe slid into the Dark Ages.

Excerpt:

A few days ago, news broke that MBIA was allowed to use statistical sampling in its ongoing Bank of America fraud lawsuit. This happened despite the Countrywide acquiror’s loud protests. And now, courtesy of today’s brand new lawsuit against BofA (and Agent Orange himself) filed by Allstate, in which the insurer “seeks unspecified damages, alleges fraud, negligent misrepresentation and violation of U.S. securities laws” we know just why Bank of America was so very against allowing sampling to be used by plaintiffs. According to the full report (pdf attached below), Allstate has determined that Bank of America misrepresented virtually everything in its prospectuses: from the percentage of owner-occupied properties reped in prospectuses (about a 10% differential), to the LTV thresholds on represented loans (both at the 90% and 100% threshold), while inbetween finding willful and malicious intent to defraud and deceive. We are confident that none of this, however, will result in a prison sentence for Mozillo, as laws in America are meant to be broken by anyone who can demonstrate an LTV more than 100,000% or have more than $100MM in annual income (including that derived from golden parachutes).

by LimeJuice2

I have a hard time reading Bill Gross anymore, or anyone talking about the US financial system/economy as if it’s a one country closed system rather than a global one. The US economy is moribund because there is no job creation. In fact, using taxpayer dollars to foment, and now trying to reflate, the housing bubble made the exodus of jobs happen even faster as it magnified the cost of living disparity between US and China/India/etc.

There is no shortage of liquidity for businesses at all. It’s just that all the liquidity is flowing out of US into other countries where they have job growth, higher interest rates, and more predictable fiscal policies, etc. GM took the US taxpayer bailout and then turned around and invested in auto plants in China.

I just got back from India a couple weeks ago, and it’s incredible the growth that has occurred there in the past 5 years since I was last there. I haven’t been to China, but from what I’ve read it is the same. Ditto for Brazil, and all these other developing countries.

For the multinational corporations, this continues to be a golden era with globalization and developing markets providing green pastures to sell products, while the industrialized countries provide cheap financing to finance their expansion.

Before globalization, lowering interest rates had a bigger effect on US economy, because US employers would respond by hiring US workers. Now an employer like AAPL responds to increased demand by calling up FoxConn and telling them to add another assembly line for IFad gadgets. The Fed policy levers are completely broken. Yet, they continue to focus on US unemployment as a key metric for deciding to lower interest rates. Oh yeah, and the neutered CPI metric barely registers a 2% jump while there is massive commodity inflation.

Instead of 0% interest rates and QE2, the US should stop weakening itself and raise interest rates, to stop providing the artificially cheap capital which is helping develop other countries economies and funding multinational corporations profits (which they squirrel away to the Bahamas to avoid US taxes).

But it’s not going to happen until there’s a crisis. One of these times when there is a crisis, nobody is going to rush into USD$ for safety. That’s when you’ll know the sh@# really hits the fan.

This post is reprinted from this thread on the Bears Chat forum. Thanks to Limejuice2 for his/her thoughts.

I like Obie, but he has drunk the Kool Aid. We are doomed. He’s listening to the advice of those very same world renowned egonomists who never saw the current mess coming. How could those who never saw it coming in the first place, and didn’t recognize it after it had already begun have any clue how to get us out of this mess? It makes no sense. But Obie is obviously listening to them. So we are doomed.

Doomed, I say.

What’s my advice? After all, I was one of those non-economist types–called bears– and we are multitude–who did see this coming. People like Bill Outada Poole, Big Dick Cheney and others say that nobody saw this coming. Well, the government bigshots and mainstream egonomists didn’t see it because they were the problem. It was their system. Greenspan built it and he was their maestro. Those of us malcontents on the outside looking in–we saw it and we screamed and yelled and ranted and raved, but nobody on the inside wanted to hear it. They were having too much fun sucking on the teat of the Ponzi scheme they had created.

But that’s for another time. The question is what I think “they” should do now.

Nothing. Because contrary to their conventional wisdom, doing nothing is actually much more likely to help the situation than following the advice of those who caused the problem.

That’s right, nothing. Oh, we definitely should have a little trickle up economics–some programs to allow the unemployed to subsist. We need to spend a lot less money on guns and more on butter for sure. And I guess we’ll have to raise the age for Social Security to 70, and roll back government fat cat pensions.

As for bailing out the bankers and brokers and corporate CEOs and all the friends of the politicians, I say let ‘em fail. Too late, I know. Bailing out the rich bankers and brokers will not save the system, it only puts the US taxpayer, instead of the investors who assumed the risk in the first place, in the position of bagholder of last resort. Why should we be the victims just to bail out the irresponsible self aggrandizing bankers, financiers, and economists, the thieving corporate CEOs and CFOs, and the lazy, irresponsible, and crooked investment managers who caused this mess? These spending programs are burdening US from now till kingdom come with a problem that those people caused. Yet we are bailing THEM out. WHY? Because they have the power. We don’t.

Take for instance Senator Scummer thanking Citibank today for throwing its support behind the bankruptcy proposal to allow judges to force mortgages to be crammed down. What the hell does Citicorp have to do with the legislative process? Why should the Congress need that company’s support to pass any legislation? Why are OUR representatives THANKING THE CRIMINALS? Whatever happened to government of the people? The extent to which the corporations have taken over this government is shocking. The politicians don’t even pretend any more. They thank their corporate bosses publicly for giving the OK to legislation.

It’s an outrage.

OK, just another outrage. After a while you get numb to it. That’s how they get you to play the game and turn over the fruits of your labor. They slowly and surely wear you down and numb you to the pain. Orwell wrote the manual 60 some years ago. Did he suspect, did he know, that he was predicting the future of the United States of America?

They’ve already done this business of borrow and bail twice and the result is as obvious as the finger up your nose. Just look at what happened to the markets the previous two times where the federales engaged in massive public borrowing over a short period of time, last May and last October. The outcome will be no different this time.

The borrowing for “The Stimpack” as currently envisioned will crush the stock market and destroy whatever is left of confidence world wide. It will cause an even greater crisis by potentially destroying the world’s perception of the creditworthiness of the US Gummit itself. We will ultimately be at the mercy of our creditors, and they at ours.

Unless they scale this Stimpack thing down to next to nothing, or by some other miracle they don’t try to raise the money, we are doomed. I think our best hope is that when they begin to implement this monster and things start to go over the cliff they will, like Wily Coyote, somehow grab a branch, pull themselves back up, reverse course, and stop all the damn borrowing.

As so many bears have pointed out, we cannot cure the disease by giving the patient more of the same poison that caused it in the first place.

Furthermore, substituting the US Gummit in the sick bed of the financial system as the dying patient of last resort is the height of folly and irresponsibility. We will now all pay the price, doomed to a pitiful, sickly existence for generations to come.

If Shakespeare lived today, he would not have suggested that they should “kill all the lawyers” because he would have had economists as his foils instead.

Polonius’s advice would still hold, however.

Neither borrower nor lender be.

________________________________________

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