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US Banks: At The Tipping Point?

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The stock market lost 200 points on Tuesday the 19th.

And it has to do with American banking.

Myself and other Conservative bloggers made our voices heard last year, this year and continuously. We collectively said: there isn’t anything quite too large to fail. GM should not have been saved. The banks and other monetary institutions should not have been saved. There would have been a fiscal hit; given. But by now we likely would have impacted actual bottom and then begun a real recovery.

Now, because of demands made by Pimco, Black Rock and the New York Federal Reserve Bank — up to and including suit — I fear the entire US banking scheme is truly on the precipice of a potential national systemic failure.

Yet you’ve likely not heard of this or had it framed quite this way for you.

From CNBC.com:

The New York Federal Reserve Bank is part of a consortium of eight large institutional investment firms that is demanding that Bank of America repurchase loans included in mortgage securities.

Bloomberg reported earlier Tuesday that the New York Fed had joined with the Pacific Investment Management Company, better known as Pimco, and investment management firm BlackRock in an attempt to force BofA to buy back $47 billion in mortgage bonds.

Kathy Patrick, lead attorney for the consortium, confirmed in a statement Tuesday that the group holds more than 25 percent of the voting rights in more than $47 billion worth of Bank of America securities.

Pimco and BlackRock had no comment when contacted by CNBC.

Shares of Bank of America [BAC 11.80 -0.54 (-4.38%) ], a component of the Dow Jones Industrial Average [.DJIA 10978.62 -165.07 (-1.48%) ], were more than 4 percent lower Tuesday.

A law firm on Tuesday sent a notice alleging failures by Countrywide Financial to properly service loans that were part of certain mortgage-backed securities. Countrywide was acquired by Bank of America in 2008.

“We want to enforce the holders’ contract rights,” Kathy Patrick, the lead attorney representing the bond holders, told CNBC. “Today’s action begins the clock ticking … If these issues of non-performance are not addressed and cured, then our clients will be able to enforce their rights in court.”

The demand revolves around what is called “put-backs.” And the demand is for a full 100-cents on the dollar. No discount.

The immediate exposure, as you read, is $47 billion dollars on the part of B of A.

More useless detail? you ask. More “inside baseball” that doesn’t apply to me? you ask.

No, ladies and gentlemen; I submit this is The Real Earth Shaker making an appearance before both you and me, front and center.

The NY Fed is jumping in (the bank regulator in the northeast) with these other major investment firms wanting to sue Bank of America regarding mortgage securities and the investments made in these mortgages, essentially saying that B of A sold them a “bill of goods” — in which B of A doesn’t even possess the requisite records or notes.

The firms are saying to B of A: you don’t even have the note; you sold us something you don’t even own. How do you sell a security if you don’t have a secured interest in the investment in the mortgage, if you don’t have the note?

A “put-back,” by the way, is the process of a bank admitting a selling error, saying “so we’ll buy it back from you.”

The potential size of the problem is the key issue; an issue I have yet to see addressed sufficiently by any media outlet — and a situation of which you need to be made aware. A situation I am addressing here and now on BZ:

JP Morgan Chase has now indicated that, in a proverbial “worst-case scenario” estimate, the banking industry could be forced to buy back $120 billion dollars worth of mortgages.

But in truth, this is simply way too low. That estimate falls much short.

Some Fox business analysts estimate that, if Countrywide alone (B of A agreed to purchase Countrywide, if you recall, in January of 2008) is on the hook for $47 billion dollars, then it appears the $120 billion initial estimate appears to be remarkably minuscule.

The bottom line, at least at this point, is: no one knows the true exposure/liability for American banks in this mess. Not yet.

And this certainly does nothing for the credibility of American banks, and the confidence that people can have in said banks.

The US government already owns Fannie Mae and Freddie Mac; and they in turn own 95% of American mortgages — so what is their exposure/liability?

Will the US government — meaning the US Taxpayer — have to shell out more billions upon billions in order to “save” these financial entities again, at the order-by-fiat of Mr Obama?

If the suit goes through, banks will absolutely be crippled. This is about banks failing to service their mortgages and taking them cavalierly.

The potentially-suing investors carry $16.5 billion dollars worth of mortgages.

And, further, do you have mutual funds that invest in mortgages? If so, what shall be your personal exposure?

Questions posed; answers pending.

Be aware, ladies and gentlemen.

Be aware.

You read it here first on:

BZ

P.S.
Due to its importance, this post may exist for a few more days in the digital ether.

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Obama & Demorats: The Truth MUST Be Told, And They MUST Be Opposed!

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Mr Obama and his shallow “ideas” are crashing in record time.

Compared to GW Bush, whose popularity tanked late in his second term, Mr Obama’s wings are on fire and he’s about to bank right into the ground. Taking this country with him.
I submit that the gap between what Mr Obama says and reality widens almost daily.
This reality is beginning to catch up to him:
– The Rasmussen poll predicts a gain of 55 seats in the House;

– ABC News says that, actually, 63 Demorat House seats are in danger;

– Mr Obama says that nasty “empire is striking back” — meaning you;

– Senator Lindsay Graham says Obama is taking over “most of society.” Correct;

– Harry Reid is trailing Sharron Angle by 3 points in the polls; I wrote a check to her for $500;

– Nancy Pelosi says: George Bush is still responsible for all ills;

– A Demorat 18–term incumbent finds himself with just ONE donor from his district;

– Demorats are, in fact, finding that Mr Obama is hurting their chances for re-election;
Ladies and gentlemen: BE AWARE — and VOTE on November 2nd!
Unopposed, this administration will herald the true death of our great nation. As goes America, so goes the rest of the world as well.
Most everyone has said this in the past, but I posit now:
This truly is the most important election in America’s past two hundred years.
BZ
P.S.
Thanks to Born Again Americans for the videos!
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$823 Million of YOUR American Taxpayer Dollars To African Males: Wash Your Genitals After Sex

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I’m not making this up. I wish I were. And up to now I haven’t heard or seen much of this on the internet because, after all, wouldn’t you — at first blush — think this was crazy?

But oh no; it is not. This is precisely where your hard-earned American taxpayer dollars went:

(CNSNews.com) – The National Institute of Mental Health (NIMH), a division of the National Institutes of Health (NIH), spent $823,200 of economic stimulus funds in 2009 on a study by a UCLA research team to teach uncircumcised African men how to wash their genitals after having sex.

This was part of your Economic Stimulus package.

Get it? “Stimulus”?

BZ

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The M-1 Garand: A Horribly Dangerous American Weapon That Cannot Fall Into The Hands Of Americans

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Except that it did, with style, panache, efficacy and honor during World War II, Korea, and some early limited usage in Vietnam.

Invented by John Garand of the United States Armory in Springfield, Massachusetts, his rifle allowed the US to enter WWII as the only country possessing a semi-automatic rifle for its soldiers.
Chambered for the rather effective .30-06 Springfield (7.62 X 63 mm NATO) — or 7.62 X 51 mm (.308 Winchester) round, roughly six million of these rifles were produced.
Apparently now, however, your federal BATF considers this weapon a threat to the United States, as it just might get into your fetid and shaking fingers at a reasonable price.
Here is what has happened as per WND.com:

The State Department in May 2009 approved a “request by the Government of the Republic of Korea (ROK) to transfer 87,310 M1 Garand rifles and 770,160 M1 carbine rifles to U.S. private entities for subsequent commercial re-sale in the United States.”

But the ATF contacted the State Department and argued the stock of rifles “poses a threat to public safety in the U.S.” As a result, the State Department reversed its decision.

The transfer of such weapons would raise the number of guns available and, therefore, lower the price, making them more generally available, the agency found.

And Lord, how we absolutely cannot have efficient, reasonably priced rifles more generally available to the American public.
Certainly not at a time when the American public finds itself just a tad distressed with the performance — or lack thereof — of its American politicians.
The Second Amendment ought to be the last policy held in high regard by DC during these challenged times, might you not argue?
After all, an approval such as this could prove quite the frightening event for this current administration. Lord Love A Duck, let us keep the American Public ignorant, mute, sheltered, ill educated, anesthetized, placated, soothed and distanced from current reality.
Else they begin to make some soul-shattering — and regime-shattering — conclusions.
Of further import from WND.com:

The gun expert who acted as a source for WND said the implications of the case are significant for several reasons. One is that a “5-year-old” could figure out that if the government classifies one type of rifle as a “threat,” there could be similar designations for other kinds of firearms.

Further, he said a team of ATF managers actually took the initiative in writing the agency’s condemnation of the Garand. He noted the agency from 2003-2009 traced an estimated 1.8 million guns for various reasons.

But of those, only some 1,900 were Garands.

“It’s a very select core of old-school ATF narcissists who have just become too powerful and too arrogant,” the source reported.

But perish the thought! Any portion of our federal government “arrogant”? That is so beyond human ken.
Further:

Officials with the ATF declined to comment to WND, but a spokesman for the U.S. Department of State explained that the permission had been granted for the rifles to be shipped to the U.S., then it was rescinded.

The decision, explained Karl Duckworth, was prompted because of “concerns that such large numbers” of weapons would be brought into the U.S. and they could be “exploited for illicit purposes.”

However, he said he could not elaborate on just exactly who expressed the concerns.

Whom might you think? Mr Obama? Eric Holder? Those attempting to keep themselves in what little good graces exist in the current administration?
Allow me, if I might — in my moment of tinfoil-hatted alarmism — to extract the core thoughts of these moves:
Look at our history in this nation. Look at the history of other nations. Who was a “serf”? Was it not someone who was purposely kept in a position of being completely unable to defend himself and his family by efficient means and a level playing field?
I’m quite sure that, about this point, you can draw your own “logical extensions” as I am wont to say.
And if you still don’t see it, allow me to conclude from the WND.com article:

The report from DHS’ Office of Intelligence and Analysis defined right-wing extremism in the U.S. as “divided into those groups, movements and adherents that are primarily hate-oriented (based on hatred of particular religious, racial or ethnic groups) and those that are mainly anti-government, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely. It may include groups and individuals that are dedicated to a single issue, such as opposition to abortion or immigration.”

Most notable was the report’s focus on the impact of returning war veterans.

“Returning veterans possess combat skills and experience that are attractive to right-wing extremists,” it said. “DHS/I&A is concerned that right-wing extremists will attempt to recruit and radicalize veterans in order to boost their violent capacities.”

And who are “extremists”?
Oh yes, that’s right: those who believe in limited government, who believe in a Strict Constructionist method of the US Constitution, who believe in the Founding Fathers, who believe in Borders, Language, Culture, who may possibly be members of various TEA Parties.
You know: actual Americans.
BZ
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