Saturday Reads Around The Internets - Sue the Banks

Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.


The FHFA Sues the Banks

About time. The FHFA is suing 17 banks over stuffed CDOs with bad mortgages.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

Another article reports:

17 financial institutions that sold the mortgage giants Fannie Mae and Freddie Mac nearly $200 billion in mortgage-backed securities that later soured.

Ritholtz has put up a few of the documents from the filing, along with the damage figures. This is gonna be huge.


The U.S. Imports Guest Workers While Americans Go Jobless

Weaver cranked the numbers and found U.S. STEM occupations lost 203,200 jobs in 2010. You'd never guess that from the never ending corporate lobbyist whines about a cheap labor shortage. Weaver then begs the question, when an occupational employment level declines, shouldn't the occupation be removed from DOL Specialty Occupations List for non-immigrant visas?

No brainer right? (pun intended)


The Golden Gate Bridge Suicide Catcher's Net

A sign of the times. San Francisco has had such a rash of suicides they are building a net on the bridge to catch the jumpers:

At least 24 suicides have occurred since January, compared with 25 in 2010; recent annual rates have averaged about 27. (The record is 40 in 1977, according to a San Francisco Chronicle analysis.)

Caltrain, the commuter rail service between San Francisco and Silicon Valley, has also seen a spike in suicides and also appears to be headed toward a record this year.

There have been 12 deaths on Caltrain tracks so far in 2011. Most remain under investigation, but four have been determined to be suicides. In 2010 there were 11 Caltrain fatalities, all suicides. The record for suicides is 15 in 2009.


Doormat Nation: One Reason for Job Losses

Economist Robert Gordon makes the case that weakened unions and reduced labor power is one reason we have this pathetic employment situation.

The US is missing millions of jobs. This column argues that the total is 10.4 million. It claims that 3 million of these can be traced to the weakened bargaining position of labour and the growing assertiveness of management in slashing costs to maintain share prices. Moreover, this employment gap is not shrinking because of the ‘double hangover’ effect—an excess housing supply and besieged consumers unwilling to spend.


AT&T Doesn't Get They Ain't Goldman Sachs

Doesn't AT&T know that only the Banksters get whatever they want, regardless of how badly it affects America? Bloomberg describes the shock when the DOJ just said no to their merger with T-mobile.

Chief Executive Officer Randall Stephenson said in a television interview that he expected his company’s bid for T-Mobile USA Inc. to get government approval by the first quarter of 2012.

An hour later, his lawyers received a call from the U.S. Justice Department, according to a person familiar with the matter. The attorneys were told the government was suing to block the $39 billion transaction,


Time Machine, Wired Goes Through the BAD Math of a CDO

Recently the topic of derivatives and faulty mathematical models has popped up in relation to QE3. I recommend all read this great Wired Magazine article translating the mathematics into English.


Del Monte Sues FDA for Stopping their Contaminated Cantaloupes

You can't make this stuff up. Economic in Crisis points out just the action of a lawsuit plus the costs might force the FDA to not do it's job.


Saturday Fact

Over 54 million collected social security in 2010. Think about the overall economic impact, not only to retirees, but the economy as a whole, if social security didn't exist.


What shocking facts, figures and events did you see this week? Lord knows there are lots to choose from.



A little more on STEM and H-1B

We were stonewalled on H-1B data for years, in fact the FY 2010 H-1B Characteristics report to Congress is late -- I believe the 2006 and 07 reports were years late. I remember a news organization had obtained FOIA for detailed H-1B data and (at quite an expense) the government couldn't produce a readable query output.

It appears that the INS was able to produce occupational reports, in FY 2001, 191,397 H-1B visas (I assume continuing and initial approvals) were granted in Computer Related Occupations alone.

See Appendix A

The Employment and Training Administration doesn't seem to be in any hurry to distribute H-1B Training Assistance Grants. It appears that they dole out Grants when the kitty reaches 200 million. At $500.00 per visa, times 85,000 visas the yearly take would be $42,500,000.00 it appears that it takes 5 years to get around to issuing RFPs for these grants.


There is a current RFP for these retraining grants (Closed June 2, 2011)

The last time distributed H-1B Techinical Skills Training Grant funds was in 2003.

What is a RFP?

Are you saying our government is giving away money to train foreigners on guest workers here or ? I don't know what this means.

If it has closed, it's no lonnger a RFP

Presumably, this was open competition -- though many RFPs have been issued on a sole-source basis. We do need to be certain RFPs for technical, scientific, and management services give American (small) businesses a chance to compete for federal $.

Frank T.

what does RFP stand for?

Remember your discussion is for the rest of the class. Most people, including finance and economics, business readers, who are the ones most to hit this niche econ site, have no idea what a H-1B guest worker Visa even is or what the problem is.

Request for Proposals (RFP)

RFP usually refers to contracting (federal meaning) but apparently being used to announce availability of grants. RFP includes such info as purpose of announcement, scope of work to be done, who is eligible to bid, and how to apply. These grants (Employment and Training) may be limited to certain kinds of applicants such as state agencies, but also may include other parties such as nonprofits, universities, community organizations, etc. Grants also may go to profit-making entities, but the RFP defines who is eligible to apply.

Frank T.

Request for Proposal (RFP)

Sorry, I didn't define "RFP" in my earlier comment, "Request for Proposal".  The government calls these announcements "Funding Opportunities" and other terms that escape me now.  


In response to Robert's question, "American workers" are eligible for retraining (see description below). In legal-ease, "American worker" simply means a person who works in America, I'm sure that some court of law could find that grant funded retraining may not be withheld from temporary workers just because they are not citizens.  I wasn't making an inference as to who receives the retraining, I was making an observation about the timeliness on the distribution of funds. I find it interesting/pathetic that with all of the media attention about a shortage of "qualified" STEM employees (Science Technology Engineering Math),  retraining funds for STEM workers are allowed to accumulate for some eight years. 


Here's a description of the Funding Opportunity (RFP) from the text.


The Employment and Training Administration (ETA), U.S. Department of Labor (DOL), announces the availability of grant funds for technical skills training for employed and unemployed American workers. These grants are financed by a user fee paid by employers to bring foreign workers into the U.S. on a temporary basis to work in high skill or specialty occupations. As part of the H-1B non-immigrant visa program, this technical skills training program was established under the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA 1998) as amended by the American Competitiveness in the Twentieth Century Act of 2000 (ACWIA 2000) and companion legislation. The grants are a long-term solution to domestic skill shortages in high skill and high technology occupations B raising the technical skill levels of American workers so they can take advantage of the new technology-related, high skills employment opportunities.

About That $200 Million Requirement

Do you know if that's by law or is it something that could easily be changed by issuing a new regulation?

Ridiculous. Heartbreaking. Not that $50 million a year will go far but it should go and not stay in a kitty for another 3 years.

Great work by the way, keep it up.

illegals $4.2B through child tax credit

While it's disgusting Faux would blare this factoid, ignoring the billions and billions corporations do not pay, it's still pretty astounding. Illegals are getting tax credits for a loophole on the child credit.

Let me get this straight, illegal advocates claim they just didn't know when that illegals passed off someone else's social security as their own, but magically, become astutely aware and hire CPAs to help them get cash back from the IRS?

Now if the press will cover the billions lost by corporations promising to create jobs, in order to get state and local tax credits and some contract, instead offshore outsourcing those jobs, yet somehow the tax credits and financial incentives are never rescinded.

Claiming dependents

The law used to be, maybe still is, that if you are working in the U.S. and sending money to dependents back home (like in Chihuahua), then you could claim them as dependents on your 1040. BUT that only held for citizens of Canada and Mexico, not China or Philippines or Guatemala, etc.. Guatemalans considered this grossly unfair. These are all presumably legal holders of green cards, but maybe not. For the most part, my impression is that filers such as this generally had records to back up their payments to dependents (wire transfers) and sometimes they even could and do obtain verification (affidavit) from a parish priest in their home town.

The thing is, at the same time, there is so much scamming going on with using SSNs that are somebody else's. Such goings-on have been known to break up families when the real SSN holder in Michigan gets zinged for child support for three children and a woman in Southern California. Usually, the first notice has been discarded as just some kind of computer mistake of no import or consequence, but it turns out that under special Child Support provisions of California law as to legal notification, the non-respondent has been proven guilty in a California court due to lack of timely response (like maybe 10 days - be sure to sent certified with signature required). Then the poor guy's wife in Michigan says "What the heck is this? You dog! I already seen a divorce lawyer!"

Of course, CPAs aren't generally involved. Just your friendly local tax preparer.

Such are the devilish details in this best-of-all-possible "globalized" world.

Even the WSJ knows AT&T Merger would have caused job losses

Very amusing. In a Hail Mary, AT&T said they would bring back 5,000 jobs. Nope. If the merger would be allowed to go through it's more like 20,000 workers would have lost their jobs.

Nice call out and finally even Wall Street is starting to speak out about labor arbitrage and mergers for nice bonuses and offshoring even more jobs.

Who could forget Carly Fiorina's slash and burn of HP along with Compaq.

Investment genius

"Who could forget Carly Fiorina's slash and burn of HP along with Compaq?" -- Robert Oak

Apparently some remembered!

Fiorina invested $5.5 Million of her own money in her campaign to unseat Democrat Barbara Boxer. See, New York Times archive.

Plus a  few more $Millions ...

"Boxer's re-election Tuesday was not easy. She faced a multimillionaire candidate and a wave of attack ads funded by out-of-state business and conservative groups." -- HuffingtonPost archive (2 November 2010)

True, Ross Perot invested between $60 Million and $70 Million of his own money in 1992 (accepting public financing in 1996), and he did not recoup any of that in personal terms. But Perot's presidential campaigns had a huge effect on politics through the 1990s, and it was Perot's continuing activism with the Congress after 1996 that, arguably, should be given credit for the famous Clinton balanced budget.

Suicide rate 'experts' GIGO

This is an even-better-than-usual Saturday round-up of what's out there, but ....

Item about Golden Gate Bridge suicides, interprets relatively high 2010 suicide count,  at the notorious Golden Gate Bridge suicide magnet, as "a sign of the times." Citation is to Scott James, columnist for 'The Bay Citizen', published in New York Times (26 August 2011), who goes farther out on the limb to claim "suicides from the Golden Gate Bridge this year are on the rise — a pace approaching records. The economic downturn, some experts say, could be a factor" (Scott James, 'The Bay Citizen', NYT).

The "experts" appear to reduce to one engineering professor, Natalie Jeremijenko. This expert, as part of what she terms the "Bureau of Inverse Technology art collective," created a "Despondency Index" by correlating DJIA with the number of jumpers detected by "Suicide Boxes" that she claimed to have set up under the bridge. There's a methodology problem in that there appears to be no evidence that Jeremijenko ever actually did set up the "suicide boxes" claimed as a data source, or that the "suicide boxes" actually exist. I have to admire this imaginative power in an engineering professor, but that doesn't make her an expert on suicide rates correlating with economic indicators.

See, Wiki article on the Golden Gate Bridge at 'Suicides' --


Serious look at suicide rate as an economic indicator

At Numerian's  'We Can't Just Sit Here Doing Nothing', posted, 2 September 2011, there's my comment 'What CAN a Third World country do?'

Numerian effectively raised the question whether anything can be done to resurrect the economy that is required for the SuperAmerica dream. Maybe, like so many Third World countries, there's nothing that anyone can do ... overpopulation, endemic political-corporate corruption, domination by foreign capital, divisive identity politics (modern tribalism) ... and so forth.

The question that I raised, "What CAN a Third World country do?" begs the question, "Is USA becoming a Third World country?" Before that question, however, comes the question, "How would we tell if USA has become a Third World country?"

What are the objective indicators of Third World-ization?

Is suicide rate an indicator ... and, if so, of what?

One notable stat is that for the U.S., (especially if suicide is underreported, as is generally assumed), if we total homicides and suicides together, that category would constitute about the 8th leading cause of death in the USA. Here, as usual, there are the pesky details -- what about deaths due to overdose? Alcohol-related deaths?

The problem is that national suicide rates look to correlate much more with cultural than with economic factors, and presumed cultural factors are generally less than clear.

See, Wikipedia's 'List of countries by suicide rate' --

Top 10 suicide rates, WTO data presented by Wiki
Top 10 suicide rates by country

(WHO data presented at Wikipedia's 'List of countries by suicide rate')

Many in the USA like to suppose that Swedes are world leaders in suicide, as a result of their alleged socialist tendency. Others claim that Sweden's suicide rate should not be compared to the USA rate because Sweden's demographic reporting system is almost incredibly more accurate. (I believe it's true about Sweden's demographic reporting -- the only nation that is probably better in that respect is New Zealand, where they allegedly keep a highly accurate record of every sheep, including the sheep's date of birth.)

It turns out that Sweden's suicide rate is very nearly the same as the rate for the notoriously capitalistic Switzerland! The undisputed grand champion of suicide rates is Lithuania in 1995, continuing to the present day -- but peaking in 1995. That means that suicide correlated with the transition from a centrally planned to a free market economy, including a privatization campaign and pegging of their currency to the US $$$ dollar, subsequent to the restoration of Lithuanian independence in 1991. (And Lithuania is a predominantly Roman Catholic country!)

BTW: The champion suicide rates of Lithuania were overwhelmingly for the male population, and it appears that rates for males are universally higher than for females, even in India. (But there's thought to be underreporting of suicides there in the category of 'kitchen fires' that are perhaps not accidental in reality.)

Similarly, there's nothing much to be made of differential national homicide rates. Yes, it's true that USA homicide rate is notoriously higher than that of Canada or Australia (or of Sweden or many other countries). However, USA is hardly the leader in homicides per 100,000.

See, bar graph



Country comparisons

Suicide rates may also indicate rates of clinical depression, but more sociological look at charts brings Durkheim to mind. 6 of the 9 countries are former east bloc and have been subject to rapid social and econ change. Japan -- may be confounded with aging population. All I can reasonably infer is that men have much higher rates. For several of these countries, high rates of alcoholism as well (Russia, Hungary, Belarus). Haven't looked in depth at these, but would expect indicators with more latency to be high as well (alcohol consumption, cigarette smoking, impulsivity). A fellow at Hopkins did a study a few decades ago looking at cirrhosis in relation to unemployment during the great depression. Country just coming out of prohibition, so international data might have better informed his work.

Frank T.

Don't Allow Foreclosure Foxes Handle the FHFA Lawsuit!

If self-dealing lawyers are allowed to both defend against the FHFA lawsuit, as well as to cover their malpractice and criminal conduct, the FHFA lawsuit could be in exercise in futility. What must become immediately terminated is the DECADES of attorney unjust enrichment and extortion via “simulated” foreclosure auctions, illegal “credit bids,” of residential and commercial real estate properties gained via theft! Mortgage fraud is simply not about only INVESTORS becoming harmed!

When foreclosures become filed, mortgage lenders and bankers ARE NOT required to know the laws and procedures requisite for lawful foreclosures and recordation of property titles –lawyers are!!

When title companies refuse to ensure foreclosed properties, it is usually because the foreclosure was not lawfully executed. Moreover, irrespective of borrower default, NO lawyer should be allowed to SELF-DEAL and exploit circumstances and cause homelessness, and tens of thousands of dollars in losses to City Revenues. It would be ludicrous to exclude from the FHFA lawsuit, the Elephant in the Room –hiding in plain sight!

Further, Freddie Mac has (knowingly or unknowing) shelled out $$$$$$$$$$$$$$$$$$$$ toward real estate theft, criminal frauds, and social tyranny! This FHFA lawsuit, or some additional one needs investigation and recovery of those moneys. People who acted in furtherance of those financial frauds ought to be brought to justice! With our nation’s high unemployment, self-dealing and unscrupulous exploiting of people who owe debt is ravishing America.

An irrefutable instance of Freddie Mac’s involvement in foreclosure frauds (An Elephant depiction!): A defunct mortgage lender’s identity was utilized to place a “credit bid” at a sham foreclosure auction of my home (it is impossible for a non-existent lender to bid \ has no“standing”!) From the so-called auction, a deed was recorded into the defunct lender’s name. (void as a recorded Hibernia deed, rather than successor, Capital One.) Six weeks after the so-called auction, Freddie Mac paid an imposter $86,000 for the worthless property deed, which became put back on the market.

Such in-your-face fraud transactions have continued unaddressed for decades. Fraudulent flipping of real estate make the housing market appear thriving; impresses Investors. In our land of rules and laws, identity theft is criminal, and so is Freddie Mac buying stolen property. However, all that has really mattered were the benefits to be gained by defaulted mortgage loans –even jurists and their allies stand to become enriched from foreclosures. Moreover, acceptable practices include crippling property owners who interfere with foreclosure objectives!

HUNDREDS OF PEOPLE have experienced some form of abusive, illegal tactics associated with owing debt, and have signed this petition. Their names and pleas can be seen here: Equally as important to America as Investors, they are pleading for help –because they too are victims of the Feds’ failure to properly oversee, regulate, and rein in mortgage industries.

I continue speaking out because attention to this aspect of foreclosure crisis is vital, while the monster roams! A monster so brazen, it sets forth its asinine contentions about defaulted borrowers unentitled to know why they’re being forced to abet mortgage frauds, subjected to invaded privacy, Constitutional wrongs, threats, etc. –all directly associated with real estate frauds. These all the more make is essential to tell the facts of how egregious and far reaching is mortgage fraud.

Keep the baby

Excellent, 'Barbara Ann Jackson'!

Yes, exactly. Shady practices. Unethical behavior. Anti-market. Anti-freedom. Anti-people. Basically more steps toward Communist corporatism.

BUT, don't throw the baby out with the bathwater. That is, do not let the thieves, under the guise of "tort reform," eliminate the right of the people under the Constitution to hire attorneys on a contingency basis.

If attorneys are made unavailable by law to the people, only criminals will have attorneys. And the next step will be another "reform" to assure that courts will not entertain pro se motions!

The country needs REAL reform! Start with your local congress-crittur, check out votes in Congress, follow the money. When in doubt, throw them out!