I foolishly hoped the Facebook IPO might actually bring some confidence back to Wall Street.

What was I thinking?

Turns out it’s just another example of how the soulless Wall Street culture is destroying American style capitalism.

We have barely gotten past JP Morgan Chase’s $3 billion catastrophe, and the outrage over their foolish decisions, but here we are again. The attention span on Wall Street seems equivalent to that of a small child.

Scott Udine, a broker friend of mine, said it best, “The brokerage firm community is made up of salesmen and people that mainly care about THEIR bottom-line….not yours!!! They will sell anything, say anything and do anything.”

Morgan Stanley over sold and over hyped too many shares of Facebook to an unsuspecting public, while quietly telling large institutional investors another story. And to add insult to injury NASDAQ had such huge headaches processing all the buy, sell and cancellation orders that they now admit the whole IPO was an unmitigated disaster.

So once again its heads, the banks win, and tails, you lose.

Morgan Stanley changed the game as the lineup was being announced. It reeks of impropriety. Anybody in the stock business will tell you it is practically unheard of.

I can only add this to the mounting list of evidence against the too-big-to-fail and too-big-to-jail banksters and sigh in disgust.

If you’re wondering why a foreclosure defense attorney is up-in-arms about a stock offering, it is because the same shady tactics that have led homeowners to my office are the same ones on display here.

Just as the banks tried to sell mortgages they knew were garbage as “safe” investments, Morgan Stanley pushed Facebook stock that probably wasn’t worth the paper it was printed on.

The only difference here is that unlike with the foreclosure crisis and robosigning, we are seeing everything unfold as it happens, in real time.

I only pray that the regulators in Washington aren’t asleep at the wheel and will actually do something about it. Unlike with the JP Morgan loss, this isn’t their money that went down the tubes.

It’s yours.

The Facebook debacle is indicative of why less and less companies are going public. Smart people just don’t trust Wall Street, and now I suspect no ones does. Since 1997 the drop in companies going public has been a whopping 48 percent. No wonder.

America better not think it has a monopoly on economic engines, or that its model is the only game in town.

Just look at China, where 80 percent of their companies are State Owned Enterprises. In Russia SEOs make up 62 percent while it is 38 percent in Brazil. This is the new global model, and right now it’s making our economic template look out of touch and out of date.

If our system is going to compete with these entities we need to make sure it is not broken, and today it is sure looks like it is.

From The Trenches,

Roy Oppenheim

Well the dog-and-pony show that was JP Morgan Chase shareholders meeting came and went.

If you blinked, you probably missed it.

Jamie Dimon’s heart-to-heart with his shareholders lasted a whopping 50 minutes on Tuesday. Apparently that was all the time he felt he needed to trot out the same apology speech he gave on Meet the Press, and then duck for cover.

And surprise surprise, nothing changed. Dimon held onto his dual roles as chairman and CEO, as I fully expected he would.

To the shareholders credit, they didn’t take this lying down. They challenged his role as a member of the New York Federal Reserve. They kept the heat on Dimon for Chase’s role in the mortgage servicing fiasco.

But Dimon’s responses were cursory at best, a brush off no different than the ones homeowners have gotten from Chase. They were hardly worth the price of admission.

Now I’m no conspiracy theorist, but clearly Chase held back this information about their $2 billion oops until after all the votes were in. That is clear.

Dimon may be saying the right things in public, but his actions clearly show that he is doing everything possible to downplay this loss. But if it goes unchecked, it could be a harbinger of even BIGGER losses.

Every consumer needs to a long hard look at the the way these banks do business and the interwoven relationship between these banks and our government. Not only are these banks too big to fail, but Dimon himself has become too big to fail in his own right.

The idea that he is both chairman and CEO essentially allows him to be judge, jury and executioner of his bank’s money. It’s too much influence for one man to have, and as this trading loss shows, it proves a need for proper checks and balances, not just for the banking industry, but within the individual banks themselves.

And if the government is going to be serious about financial reform, it has to come down hard on JP Morgan Chase, because Dimon won’t take care of business himself.

Unless he removes himself from the New York Fed, how can we take a thing he says seriously?

He calls his position on the Federal Reserve ‘an advisory role’, but it’s just further proof that it is impossible to tell where the banks end and the government begins.

It is a real problem how some Feds are encompassed by the Big Banks, and Dimon’s position is me example. The largest banks are creating a system that is there to protect their own hides, which is not what the Federal Reserve is intended for, at least on paper.

The Fed needs to be working to stabilize the economy and protect consumers from interest rate spikes and unemployment spikes, but it sure seems like they are there to make sure the banks will have some kind of liquidity, and for the banks to have a bailout big brother in DC whenever they need it.

While the FBI is investigating the trading loss, I have serious concerns about its legitimacy. President Obama points to JP Morgan’s actions when talking about the need for financial reform, but he also described Dimon “one of the smartest bankers we’ve got”, so the President is too is talking out of both sides.

Both the President and Dimon are conveniently overlooking how strong Dimon has campaigned against legit regulation, not to mention that Dimon has been to the White House 18 times, and had a private meeting with Tim Geithner just last March!. (For the record, I’ve been told my invitation is in the mail!)

For Dimon to suggest he is 80 percent for Dodd-Frank is fallacious, because he has been one of it’s most outspoken critics. JP Morgan has done everything possible to make sure Dodd-Frank lacked teeth, and it’s why we still haven’t gotten away from Too Big To Fail.

There have already been a few lawsuits over the $2 billion trading loss, and there are sure to be many more.

If the federal government does not take this incident with a sense of urgency, then it can only be a matter of time before the other shoe drops.

From The Trenches,

Roy Oppenheim

Jamie Dimon may present himself as a apologetic CEO, but that is not his true face.

The Jamie Dimon Apology Tour is in full swing.

Perhaps you caught the first stop on this weekend’s Meet the Press. The chairman of JP Morgan Chase is trying to play us for suckers, publicly apologizing for his bank’s $2 billion loss.

He called it an “egregious mistake”. He claims he want to get rid of “Too Big To Fail”, and that he supported “portions” of the Dodd-Frank rule.

It might be one of the best acting performances I’ve seen all year. I think his chances of taking home an Oscar are all but guaranteed.

Maybe he had David Gregory fooled, (The NBC host’s lack of tough follow-up questions would seem to indicate it) but I am not buying it.

The reality is had JP Morgan not lobbied so hard against Dodd-Frank, and paid the lobbyists as much as they did, Dodd-Frank would have been much, much tougher, and Dimon would have $2 billion more in his coiffures.

It’s irony in its purest form.

This loss, which came on some very risky trades, is a perfect symbol of Wall Street’s hubris and greed. And it just goes to show you that the big banks have learned nothing from the crisis of years past.

And neither has Dimon. His apology on Meet The Press was the vocal equivalent of crocodile tears. He is another Chameleon, another Two-Face, putting on a public show for the masses, while privately lambasting anyone who is really looking to end “Too Big To Fail” when he thinks we are not paying attention.

I have to give credit to Gretchen Morgenson and the New York Times for helping expose Dimon as a hypocrite. Just a month ago, at a dinner for some JP Morgan’s wealthiest clients in Dallas, the Times reports Dimon attacked two men who are really trying to bring the banks back down to a manageable size.

One of them is Paul Volcker, the ex-chairman of the Federal Reserve, whose Volcker Rule could have very well prevented JP Morgan from engaging in the type of risky investments that lost them the $2 billion in the first place.

The 2nd is Richard Fisher, president of The Dallas Fed, whose annual report I praised here, who has openly called for a break-up of the big banks, like JP Morgan Chase.

Dimon called the men’s arguments against the large banks “infantile” and “nonfactual”, and Morgenson alleges he further lambasted Fisher, to the shock of many of the guests.

Dimon will be in Tampa tomorrow for JP Morgan’s annual shareholders meeting, and it’s a shame most have already placed their votes, because if they had not, I’m sure they would reconsider approving Dimon’s lofty salary.

Dimon must really think we are suckers if thinks we will accept his phony apology. He is still trying to save face and present JP Morgan Chase as a healthy company, but if you think this $2 billion loss is an isolated incident, think again.

The big banks have made tons of bets simply to increase its bottom line, it’s just this time they were exposed reaching into the cookie jar yet again. Except this time there weren’t any cookies for them to grab.

Maybe this loss will not have a lasting impact on our financial markets, but the next one very well might. And that is why the average American needs to be paying attention to these types of risky bets.

The next bad bet could be ten times bigger, and could drag down the entire economy with it, creating a systemic collapse far worse than anything we’ve seen to date.

It will most certainly happen again if the government does not reel them in. I think people are ultimately going to put their faith in government regulation, there simply is no other way of dealing with this. And it is the legislature’s job to do so.

Our government must step up. Last week Republicans shot down a bill that would have fully funded Eric Schneiderman’s Mortgage Fraud Task Force. Just as with the original version of Dodd-Frank, the tools were set into motion, but have not come to fruition.

If the rug keeps being pulled out from meaningful regulation, they will never have the tools to pursue vindication and justice.

From The Trenches,

Roy Oppenheim

Excuse me Jamie. Mr. Dimon, hello?

Do you really still think we’re fools?

How else can you explain your half-hearted apology over JP Morgan’s part in the robosigning scandal?

The CEO of JP Morgan Chase made some efforts towards reconciliation in his annual letter to shareholders, which is now out for all to see.

But it’s clear that Jamie Dimon is still delusional and suffers a full blown case of pass-the-buck disease, for which, apparently, there is no cure.

In the section titled “The Mortgage Business — The Good, The Bad and The Ugly” (He should have just left out the first two) Dimon admits to JP Morgan Chase’s shareholders that his companies ‘servicing operations left a lot to be desired’

He adds his company ‘made too many mistakes’ and that the it was ‘not our finest hour’.

What’s sarcasm!

Let’s be honest, it was your worst hour and your lasting legacy.

Here’s the problem Mr. Dimon. You didn’t just make a mistake. If I forget to buy milk on the way home, that’s a mistake. Your company, your officers and your top executives all suborned fraud forgery and perjury, all federal crimes.

Robosigning was more that just, as you put it, ‘paperwork errors’.

Everyone from the tippy-top of your company on down, encouraged this kind of illegal activity to happen, in fact it became part of the operating procedures of your company! You just farmed it out.

Why not just own up to the homeowners, the taxpayers and your shareholders. You’ve been caught with your hand in the cookie jar, I can still see the bruise.

In Dimon’s eyes, his bank was far from the worst offender, as if that makes it all right.

“We were one of the better actors in this situation – but not good enough,” he says.

Dimon is actually ‘nice enough’ to admit his signers “did not have personal knowledge about what was in the affidavits” but still claims that their information was “largely accurate — i.e, the borrower in fact, was in default, we did have the mortgage and so on.”

Baloney. Do I need to show you my case files?

In many, many cases, JP Morgan didn’t have the paperwork, didn’t have standing, and made a mockery of the judicial system, turning the courts into their own private collection agency.

In his letter to shareholders, Dimon narrowly defines an ‘improper’ foreclosure (ie — Illegal) as one where the ‘borrower was misled about significant loan terms or fees or interest rates that were higher than they should have been’ or ‘one in which the homeowner did not owe the money or was not in default.’

Again he’s forgetting how the banks misused the legal system and denied homeowners their due process in order to foreclose.

Jamie you turned our constitutional democracy into a banana republic, and your continued indignation just proves that there is no other option but to break up your bank, as well as the banks of your peers, just as the Dallas Fed has suggested.

JP Morgan Chase owes trillions of dollars in liabilities. If you were to mark down all of of your assets to the market value today, JP Morgan Chase would become a broken insolvent institution.

But the fact is Mr. Dimon, is that you’ve played this little shell game with your shadow inventory (an inventory you acknowledge in your letter) dragging it out, so you don’t have to write down your assets.

It’s bogus, and I’m calling you out.

After you read the information in these audits, chances are you'll be screaming too!

Well what do you know.

Earlier this week I blogged about the mortgage settlement documents and their stunning lack of detail on the frauds committed by the banks during the days of robosigning.

I was frustrated because it seems like the complete recklessness of the banks was being whitewashed in order for the settlement to go through.

Turns out I was just looking in the wrong place.

Just as the Department of Justice announced that the mortgage settlement had been filed in court, Housing and Urban Development released the results of a series of stinging audits, one for each lender in the settlement.

It was HUD’s investigation that helped lead to the settlement in the first place.

The settlement is hundreds and hundreds of pages. Most of the audits were around 10 pages long. Yet there is more harsh truth about how far the banks went to rob people of their homes in those select pages than in the entire settlement.

So what’s in these audits that is so damning?

Facts. Numbers. Witness Statements. And just how far the banks went keep the lid on how pervasive robosigning was

In other words, plenty to make your skin crawl. There’s no whitewashing here.

In Bank of America’s case, their attorneys interfered with HUD’s investigation, refusing to allow some of their employees to answer questions, sometimes stopping them mid-sentence.

Ally Financial’s attorneys made 18 current employees plead the fifth and blocked them from talking to investigators.

But ultimately HUD uncovered how pervasive robosigning was at all five of these institutions.

Among the facts they discovered:

Like the characters in "The Blair Witch Project", the banks are running scared!

Well what a wild week it has been. When we came to work on Monday we feared President Obama would put the housing crisis to bed without ever holding the banks’ feet to the fire.

The settlement with the banks, which we have blogged about ad nauseam this week, seemed as sure as a chip-shot field goal.

But thanks to President Obama’s suddenly get-tough approach, as evidenced by his State of the Union speech, we’ve seen the banks’ kick go wide-right and now all bets are off.

Can There Be Real Change In Mortgage Industry?

Now we are not completely sold that things will play out exactly as homeowners would like, this is of course the federal government we’re talking about, but for the first time we have a true sense of optimism. The President may finally be seeing things our way, and we want to throw our full support behind him.

There is no doubt cages have been rattled in the mortgage industry, and nerves have been frayed. If Obama’s plan to re-write the foreclosure rules didn’t have some kind of teeth, then we doubt we’d be seeing the type of reverberation thorough the media and the top echelons of government that we’ve detected in the last few days.

Banks Are Fearful of Settlement Collapse

The settlement could be falling apart at the seems, at least JPMorgan Chase CEO Jamie Dimon thinks so. He told CNBC this morning that Obama’s announcement to investigate the packaging and servicing of mortgage loans could stop the settlement cold.

“It has a pretty good chance of derailing it,” Dimon said in a televised interview from Switzerland, adding later, “I think it would be better for America if the settlement took place.”

Guess Dimon hasn’t been reading the South Florida Law Blog. You and I know it would be better for the BANKS if a settlement took place now, and we suspect Dimon knows that too.

From the moment the details of the settlement became public, there was push back from some of the Attorneys General, the legal community, and the media.

The New York Times mirrored our thoughts, in this Op-Ed piece published in Thursday’s paper they also wondered if this was finally the investigation that would end with criminal prosecution and dare we say, jail time.

New York AG Promises to Leave No Stone Unturned

The importance of the appointment of New York AG Eric Schneiderman, which we mentioned yesterday, can not be understated. His new unit, which will answer to the existing Financial Fraud Enforcement Task Force, will be composed of members of the Department of Justice, the SEC and the IRS. It will also be working with the existing hierarchies of those organizations. So his reach will be far and wide, and we believe this investigation has the potential to do some real good.

Schneiderman, along with California AG Kamala Harris, have been some of the most outspoken critics of the settlement, and he is promising a thorough investigation of ‘every aspect of the conduct that created the bubble and crash’.

To us, those words ring true. Obama is embracing real change with his appointment, and we can’t wait to see what happens next.

Roy Oppenheim wrote a letter to the editor of The Wall Street Journal in response to its The Politics of Foreclosure editorial that ran Saturday, October 9^th. Oppenheim’s letter pointed out how the opinion article missed a number of significant legal, as well as macro-economic issues, that South Florida Law Blog will post if it is not printed by The Wall Street Journal.

Yesterday’s Wall Street Journal article: Foreclosures, Forestalled by reporter Robbie Whelan discusses the cause and effect this moratorium could have on the housing recovery.

Here is an excerpt:

Consumer advocates say the judicial process gives consumers a better chance to work out their problems. But Florida’s court system is so overwhelmed with foreclosures that last year it began calling judges out of retirement to handle hundreds of foreclosure cases a day in a forum that became known as the “rocket docket.”

The New York Times article: A Foreclosure Tightrope for Democrats had some profound quotes worth sharing.

“Irresponsible banks need to be held accountable, but if we have not found a problem with a bank’s process we do not believe that we should impose a moratorium where that can hurt the market and hurt individual buyers,” said Shaun Donovan, secretary of Housing and Urban Development.

Advocates for homeowners, however, say that the pattern of sloppiness allows and encourages more serious abuses. They point to a growing number of documented cases in which lenders mistakenly seized homes.

Bank of America apologized last month for foreclosing on a home in Fort Lauderdale, Fla. The homeowner didn’t even have a mortgage. The bank had failed to notice that the previous owner had repaid the mortgage loan.

Last year the company’s contractors entered the home of a Pittsburgh woman, changed the locks, cut off the utilities and seized her pet parrot. The bank later acknowledged that the woman had not missed any mortgage payments.

Other companies including Citigroup and JPMorgan Chase also have apologized

for mistaken attempts to seize homes they didn’t own.

Oppenheim Law continues to follow the unfolding developments of this nation’s bank fraud and foreclosure crisis and how it impacts the Florida homeowner. Let us know your comments.

Florida Foreclosure Attorney and Legal Blogger Roy Oppenheim hosts a workshop on this unprecedented topic: The Mortgage Foreclosure Crisis. The unfolding story is also reported on this week’s CBS 4 I-Team investigation.

This is a must attend, either via webcast or live in person, for:

• Those currently in foreclosure;
• Those who may have lost their homes illegally to an improper bank foreclosure by GMAC, JPMorgan Chase, Bank of America or other lenders;
• Those who may have purchased a home recently via an illegal foreclosure;
• Those who own “clean homes”; meaning they are not delinquent and want to sell their property now;
• People looking to buy a home and wondering what they must do to protect themselves; and,
• Anyone connected to the Title Industry.

What: Toxic Foreclosures and Foreclosure Fraud Workshop

When: Wednesday, October 6, 2010 – 6 to 7 p.m.

Where: Oppenheim Law TV

Or come in person

2500 Weston Road, Suite 404, Weston, FL 33331

Cost: Free with advanced registration
RSVP: To register, email roy@oplaw.net or call 954.384.6114

Email us questions ahead of time and we will try to work them into the one-hour workshop!

RSVP early, Space is limited. More details can be found on the Oppenheim Law website.

Humpty Dumpty sat on the wall.
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men.
Couldn’t put Humpty Dumpty back together again.

Most Americans, including some lawyers and even judges don’t understand what happened. Yes, it is complex and confusing. But at the end it’s real simple.

In the old days, a bank would lend a homeowner money to buy a house. The homeowner would sign a promissory note promising to pay the money back to the bank. The homeowner also signed a mortgage, giving the bank the right to foreclose and take the house back if the homeowner did not pay back the money.

Mortgage Follows the Note

Lawyers and judges grew up with the legal doctrine that the “mortgage follows the Note.” Simply put, if the note was transferred from one bank to another the mortgage would follow the transfer.

But that was then, this is now.

At some point, the folks who brought you this mess (i.e. overly ambitious bankers on Wall Street) had the “great idea” of slicing and dicing the interest of the Note and literally severing it from the Mortgage. Why this was done was actually for a matter of convenience, expediency, and, arguably, greed. Such motivations for now are secondary to the crisis we are experiencing.

Humpty Dumpty = Mortgage and the Note

But this is clear: If you think of Humpty Dumpty as the Mortgage and Note, and you break it apart (as what occurred on Wall Street), when the Notes were broken into pieces and the mortgages were assigned to Mortgage Electronic Recording System (MERS), the fact is that it may well be nearly impossible to bring the mortgages and their corresponding Notes all back together again. Plain and simple!

Banks Under Siege

This is why the banks are now under siege. Banks are accused of fraud and perjury in trying to put the Note and mortgage back together. In fact, The New York Times is running Foreclosures Slow as Document Flaws Emerge today as its lead story. The Sun Sentinel quotes Nova law professor, Robert Jarvis (an old Bronx Science classmate of mine) who stated that this problem is now too large for the courts to handle and that the federal government or the banking industry itself will have to step in.

Following Chase’s Lead – Sun Sentinel Cover Story by Harriet Johnson Brackey

I spoke with Harriet about this yesterday and now it is today’s cover story.

Weston attorney Roy Oppenheim says the state Supreme Court’s decision to spend millions to speed up foreclosure cases is ultimately going to slow down the whole process.

“It’s going to backfire on everyone who thought they could ramrod these foreclosures through while denying people due process,” he said.

And it will!

Title Insurance Companies Stop Insuring

Adding insult to injury, some title underwriters are now not willing to insure any real property where GMAC foreclosed. That means if you recently purchased a home just pray you have title insurance because you have a huge claim looming. You will not be able to resell or refinance your property for a long time.

So… while some of us have warned for some time that many of the banks are really not “good” eggs, Chicken Little has come home to roost.

“All the kings horses and all the kings men will not be able to put Humpty Dumpty back together again.”

Oppenheim continues to help Florida homeowners learn more about developing stories concerning bank fraud and will focus on this subject in his monthly foreclosure defense workshop on Wednesday October 6 at 6pm.

Roy Oppenheim of Oppenheim Law says the three Florida foreclosure stories on this investigative report by CBS4 Stephen Stock are the rule rather than the exception. There seems to be a disconnect with the banks and some are calling it FRAUD.

“This is the tip of a very ugly iceberg and the banking ship is now sinking,” says Oppenheim.

Oppenheim continues to help Florida homeowners learn more about developing stories concerning bank fraud and will focus on this subject in his monthly foreclosure defense workshop on Wednesday October 6 at 6pm. The full CBS story is live on the Roy Oppenheim YouTube Channel.