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

A group from the Miami Workers Center clean up the area around an abandoned bank-owned house, as police officers wait nearby (Photo Courtesy:Miami Workers Group)

It never ceases to amaze me the glaring duality of the world I live in.

I am constantly reminded that we live in world where you and I have to play by one set of rules, yet the vast financial complex that resides on Wall Street isn’t held to even a fraction of those standards.

The latest example comes way of a small protest in Liberty City last week.

A few members of the Miami Workers Center, a grassroots organization, arrived at an abandoned foreclosed home, a property that like countless others is nothing more than a glorified trash dump.

Their nefarious plot? To clean the home up, and try to make it a little less of an eyesore.

Scary right?

And what did this group, which included a grandmother and an pregnant woman, encounter when they arrived at that home?

About a half dozen cops, who threatened to arrest any of them if they stepped foot on the Bank Of America-owned property.

The protesters, to their credit, didn’t give up and cleaned up the public areas around the home. Not once was a burglary tool spotted.

The officers watched over these men and women like mother hens as they picked up beer bottles and broken glass, among other fabulous ‘accessories’ the home had accumulated over the last few years. (Bank of America took the home in 2010.)

But when the banks not only trespass, but break into my clients homes? How many police officers can I get on the case? Not a single one.

Even after the banks burglarize a home, when I have proof of a crime that would land you or I in jail, I am told it’s a civil matter, if I even get that.

Usually all I am left with is a big shrug. Banks can change locks or even tear a house apart, yet when a few ladies decide to pick up trash and try to better a neighborhood, that’s when the cops decide to enforce the laws?

Why do the property rights of banks, banks that simply do not care about their neighbors, mean more to the police than that of good citizens?

As Newsweek joined the voices wondering if in fact the banks are too big to jail, I ask you, how can we put them behind bars if we can’t even get an officer to respond?

Bankers have access and influence that just hasn’t been broken, even by a President who promised hope and change.

Newsweek points out that when it comes to justice in the financial sector, President Obama has not lived up to the hype.

Now he’s been busy when it comes to civil rights or health-care fraud, but when it comes to financial fraud the feds just can’t be bothered.

Prosecutions of financial crimes are at 20 years lows, and they’ve dropped nearly 40 percent since 2003.

Once again, it comes down to two sets of rules. Bankers get to pick and choose which rules they play by, but citizens trying to do some good don’t get that luxury.

From The Trenches,

Roy Oppenheim

Too Big To Fail used to be a joke.

It became an insult hurled by Occupy Wall Street or the Tea Party at the big banks, but that’s all it was.

It was never an expression that had any legitimacy. It was just a nice little way for the media to classify the banking industry in a ready-made slogan.

Guess what? Too Big To Fail isn’t a joke anymore. It’s actual policy towards our nation’s biggest financial institutions.

The Federal Reserve of Dallas has now legitimized my scathing criticisms of the banks in their annual report and it has resonated with with everything I’ve been writing in this blog.

It was a nice early birthday present when I got home yesterday and read the report, written by the head of the Dallas Fed’s research department. Harvey Rosenblum.

When Greg Smith published his critique of Goldman Sachs, the aftershocks rang through the halls of every office on Wall Street.

After reading Rosenblum’s report, which was subtitled “Why We Must End Too Big To Fail — Now”, I can only imagine what will happen now.

It’s about time that someone on the government side validated the anger and anxiety shared by the Occupy and Tea Party movements. Right there in an official Fed paper!!

So what did I find so appealing about his critique? He spells it out, clear as day, what Too Big To Fail really is, and what’s it’s led to.

What It Is: In 1970 the top 5 banks possessed 17% of the nation’s banking assets. In 2010? 52 percent.

What It’s Led To: “An erosion of faith in American Capitalism”, as well as our faith in government, big banks and the Federal Reserve.

Capitalism has been warped into something that is anything but, where there are two sets of rules, one for you and I, and another for the TBTF banks.

As Rosenblum says, capitalism ‘requires the freedom succeed and the freedom to fail’.

By playing ball with the TBTF banks, the government went against everything capitalism is supposed to be!

The bailouts completely eroded the system that I once respected. Just as I said last year, it was “Privatizing gains, socializing losses, all in an effort to stimulate the economy”. And it got us absolutely nowhere. And now the Fed knows it. Too bad they didn’t listen to me back then!

The Emperor is walking down the street, and he has no clothes. He is stark naked. And everyone is looking at him.

There has been so much talk about the risk of ‘moral hazard’ if homeowners get assistance, but Rosenblum rightly points if you want to see the effects of moral hazard, look no further than the TBTF banks.

The 2008 bailouts didn’t revitalize the economy, all they did was take away the bank’s incentive to clean up their act. They got complacent, and no one, not the banks, not the government was willing to admit it.

No one asked tough questions, they just took their easy money and kept on going. Like the penguins in the Madagascar movie, all they did was smile and wave boys, smile and wave.

But Rosenblum realizes what I’ve been saying for years, that it is absolutely the role of government to break up businesses when they get too big and too powerful.

We did it with Ma Bell, we did it with oil companies and with big steel, now it’s time to do it to the banks

For the government to continue to support these TBTF banks would turn what was a tsunami into an all-time catastrophe.

It’s time to call them out once more. Not for another column, but rather, a lack of one.

In October 2010 their column “The Politics of Foreclosure” made light of the plight many of my clients have undergone, and shrunk the foreclosure crisis down to a mere inconvenience for a few Washington insiders.

You and I, of course, know different.

And as the crisis grew wider and wider, and the expansiveness of the banks fraud became even more apparent, The Wall Street Journal’s Editorial Board continued to be a haven for outdated ideas, protection of the status quo and disgust for anyone trying to do good by the American homeowner.

When the AG settlement was first announced back in February, the Wall Street Journal called it a ‘bank job’ worthy of the Barker gang.

I found it disturbingly amusing that a settlement that was basically little more than a public spanking for the banks angered them so. The settlement didn’t land a single banking executive in jail, yet the columnists at The Wall Street Journal still treat the banks as the victims in the housing crisis.

The crisis, you know that the banks basically created.

The Wall Street Journal editorial board still believes the banks didn’t illegally foreclose on a single homeowner, something I personally know not to be true.

Either their editorial board is remarkably stupid or just ignorant.

And so I shouldn’t be all that surprised that they have been silent after the Department of Housing and Urban Development released audits that laid out how pervasive the culture of fraud was amongst our nation’s lenders.

If robosigning was, as The Wall Street Journal referred to it just the ‘nameless, faceless employee in the back office who reviewed the file, not the other nameless, faceless employee who sits in the front’, then why did the banks go through such giants roadblocks to keep HUD investigators at bay?

The entire process of submitting foreclosure claims was flawed, and HUD said exactly that. The pressure to push these illegal documents through came from the top. Managers ignored the signers admissions that they ‘could not handle the workload’, and responded by demanding a faster turnaround.

The lenders’ integrity was compromised, and the documents they submitted were, once again using HUD’s own words, unreliable and inauthentic…in other words, fraudulent.

But you wouldn’t know that if you read the Wall Street Journal’s editorials.

The paper reported on the audits yes, but there was no retraction, no admissions that maybe, just maybe, robosigning was more than an just a pesky little problem.

So where is the outrage now? Certainly not in the Wall Street Journal. Unless it’s against Eric Schneiderman. Or Martha Coakley.

Their editorial board must be living on another planet.

The outrage, however, is still right here in my blog.

The banks may not be trying to pass off fraudulent documents like they used to, but that doesn’t mean they won’t try every dirty trick in the book to get you out of your home.

As I said last year, the banks hijacked the judicial system (and they are still trying), and whether the Wall Street Journal will admit it or not, everyone else now knows it.

Just as Oppenheim anticipated, this year we’ve seen how big this foreclosure mess really is. There were numerous investigations, and a self-imposed moratorium on foreclosures during parts of 2011, resulting in a massive backlog of cases.

It was ludicrous, as Bank of America officials first said, that they would only need 60 days to review their inventory of files.

“It took them virtually a year to figure out that they were doing were just not kosher and had to stop,” Oppenheim explained.

There were several huge financial settlements offered to the banks over their illegitimate foreclosure practices, but the majority just did not stick. Judges told them the settlements were unacceptable and did not go far enough. With various attorneys general and the IRS among the agencies getting involved, these cases are nowhere close to settled.

“The banks literally got their hand not just caught in the cookie jar, but the lid was slammed on it, and everyone got to see the hand just hanging there,” said Oppenheim.

2011 is leaving us with a still unstable market, so people are looking for tangible investments, Oppenheim continued, and with the dollar still weak, Florida real estate is not a bad deal. When you add the fact that there is an excess of distressed properties, prices are not expected to rise anytime soon. he said.

Now every year there is an X-Factor, and this year it was Occupy Wall Street. It was a movement no one really saw coming, and despite some right-wingers attempts to limit Occupy as a fringe movement, Oppenheim said, there is no question the message of Occupy has resonated with middle America.

Why?

It brought to the forefront two huge truths. One being that there is a huge economic inequality between the so called ‘1%’ and the rest of us.

The 2nd is that the veil has been lifted on how intertwined the government, the big banks and the Federal Reserve have become.

“The banks have grown so big and so large that the government itself is afraid to really, truly regulate it, because you really can’t tell where the government starts, where the federal reserve ends, its a really ugly sight.”

Anyone looking for an example need look no further that the 7.7 trillion dollars the Fed loaned to the largest banks — at essentially 0 percent! And what did the banks do with those assets?

Well its not only what they did, Oppenheim said, but what they DIDN’T do.

“They didn’t lend it to mainstream America, which would have seemed like they were going to do to help reverse this deflationary cycle.”

Instead it only led to more profits,which “came off the backs of you and me” to pay themselves bonuses and to help elect officials that were sympathetic to the banks, and not the average Joe.

Some politicians have floated the notion that corporations are people, but then, Oppenheim asks, how do you arrest a corporation and hold them accountable?

He concedes that it’s possible that individuals within these companies may not have committed a crime, but it’s clear that some companies as a whole did.

“I don’t buy into the notion that a crime wasn’t committed,” Oppenheim said, “We have not advanced our legal system sufficiently to deal with these very complex financial crimes.”

While foreclosures may have slowed down in 2011 he expects them to pick up in the new year.

“There’s this new wave, It’s not going to be as large, but it’s going to be a continuous stream coming through.”

Then there is what he calls zombie foreclosures, which had been dismissed, but not permanently. Oppenheim would not be surprised to see them spring up in 2012.

“So far we haven’t seen them come back, but the banks have the right to bring them again,” he said.

If that happens, he fears the system would once again become bogged down with an overload of foreclosure paperwork, that will go through at a much slower pace.

The truth is, if banks brought all foreclosures to market right now it would crash the market, Oppenheim said, and the banks would become insolvent.

So what does Oppenheim predict for the real estate market in 2012? While he knows he can’t predict the future, Oppenheim says to expect the unexpected.

“I see that they’ll be something that we completely don’t anticipate,” Oppenheim said, “I’m not sure what it’s going to be.”

Coming up in our next blog, we’’ll review our top 10 stories for 2011. Happy Holidays!

Wall Street corruption blurs the lines between good guys and bad guys as this week’s headlines bubble to the top.

Government's Long Enforcement Slumber is Over, says Roy Oppenheim

Unbelievably guilty in the court of public opinion. Now ultimately guilty in a court of law.

The conviction of Galleon hedge fund billionaire Raj Rajaratnam on all 14 counts of conspiracy and securities fraud is a prime example of rampant Wall Street greed and conspiracy.

It’s become clear that bankers took advantage of us all through the tricks and frauds of petty crooks. Ironically, these crooks bankers are now being brought down by the same investigatory wiretap techniques once used only in drug and mob cases. Perhaps “Bankster” is now the appropriate moniker.

Rajaratnam, formerly viewed as a skilled investor and stock market genius, should have stuck to “counting cards.” It’s one thing to make informed, intelligent investments by counting cards through legitimate research and public knowledge. It’s another matter entirely to “mark the cards” through insider secrets, privileged tips and paid informants.

Now, after a mosaic of insider trading and deception has been uncovered, the billionaire Rajaratnam is exposed as a card marker. Consequently, he faces the prospect of spending the rest of his life in federal prison.

Not surprisingly, this card marking culture is closely tied to the banks and mortgage-baked securities (MBS) industry that brought down the American real estate market. Banks simply were playing a game they new they couldn’t lose.

Our banks executed their own card marking by spiking investment portfolios with mortgages they knew would never be paid and then betting against those portfolios through the insurance markets. Rolling Stone magazine analogized the process to selling a car without breaks and then betting on it to crash.

Just as justice is being served on Rajaratnam, it appears banks are not in the clear of their spectacular malfeasance. Signals continue to point to the fact that MBS litigation against the banks is just beginning.

First, AIG has finally started taking legal action against some of the banks that induced it to insure mortgage products designed to fail.

Second, the U.S. Department of Justice has brought suit against Deutsche Bank and its subsidiary, MortgageIT, for several violations of the federal False Claims Act, common law negligence and gross negligence based upon years of reckless lending for more than $1 billion. Bloomberg reports that this may just be the beginning of suits by the government against lenders.

“We go where the evidence takes us, and if it takes us to the larger players on Wall Street, so be it,” said Helen Kanovsky, the Housing and Urban Development Department’s general counsel.

Finally, it’s possible that following the Deutsche Bank litigation, criminal charges may follow. Oppenheim Law wrote about the Matt Taibbi Rolling Stone Magazine article, “Why Isn’t Wall Street in Jail?” in March begging for accountability for this financial scandal. It appears the banks’ day of reckoning could be right around the corner.

Two weeks ago, the Levin report issued by the U.S. Senate, found that Goldman Sachs misled its clients about mortgage derivatives, was formally referred to the Department of Justice and SEC.

Ultimately, Goldman and its executives could face criminal charges for its actions leading up to the mortgage crisis as well as indictments for perjury in connection with executives’ testimony before Congress.

The bottom line is that hedge fund managers, investment bankers and our country’s largest banks grew too smart and too greedy for their own good. Finally, it seems justice will be served. The pendulum is swinging back… it always does.

From The Trenches,
Roy Oppenheim

In a typical jaw-dropping article for Rolling Stone Magazine The Real Housewives of Wall Street, Matt Taibbi reveals the shocking practices of the Federal Reserve during the Great Recession.

With the nation staggering, the Federal Reserve took it upon itself to lend trillions of dollars at nearly zero percent interest. Then, as collateral, the Fed took the securities that were bought with the loans. The arrangement meant that if the securities lost money, the Fed would be stuck with the losses but if the securities made money, then the investors would pay back the loans and keep the higher priced security. Privatizing gains, socializing losses, all in an effort to stimulate the economy. Such loans were not made available to everyday folks; only to the important pillars of our economy: Japanese car companies (while bailing out their competitors), Middle Eastern banks (including one later bought by Muammar Gaddafi), tax dodgers in the Cayman Islands (imagine, subsidizing tax evasion), and the spouses of Wall Street executives. No, that isn’t a typo, the wives of Wall Street executives were offered risk free loans guaranteed by you, the taxpayer.

Taibbi looks at the case of Christy Mack and Susan Karches, the wife and widow respectively of the CEO and the late president of investment banking at Morgan Stanley. While Morgan Stanley itself received over $2 trillion in Federal Reserve risk free, subsidized loans, Christy and Susan also received $220 million for their company, Waterfall TALF Opportunity. With the money, the duo bought student loans and commercial mortgages. If the loans or mortgages ever decrease in value, Waterfall effectively will not have to pay back the Fed and let the Fed keep the devalued securities.

It’s shocking to see that while Washington is debating which social programs to cut and how to get the deficit under control, the Federal Reserve feels it is ok to give nearly a quarter of a billion dollars in risk free loans to two “desperate” housewives who already have more money than they will ever need.

Maybe we all need to marry a Wall Street executive? Let us know your thoughts on this in the comments section.

Dear Wall Street: We’re not in Vegas anymore! The Sin City “players” of Wall Street might be trading in the fancy hotel rooms for prison cells.

The SEC is now following the Federal Reserve and the Senate is chastising Wall Street for effectively causing the economic crisis. The Securities and Exchange Commission today announced that they too will be joining the bandwagon and fining the major banks on Wall Street for fraudulently causing the worst economic meltdown since the Great Depression. They follow on the heels of the Federal Reserve and the United States Senate in lambasting the “banksters”.

Nearly 2

According to The New York Times editorial, the Federal Reserve has proposed a rule that would disable one of the more effective legal tools that borrowers have to fight foreclosures.

The Truth in Lending Act from 1968 gives borrowers the “right of rescission,” the ability to undo a home refinancing or home equity loan within three years of the closing if the lender did not make proper disclosures. The Fed’s proposal would change all that.

But the bigger question is why would the Fed even get involved with this hot potato? Isn’t the Fed a non-partisan – above the politics – holier-than-thou institution that keeps the economy humming and rocking? Aren’t they the ones with the ability to print money and inject it into the economy as they have the ability to suck money out of circulation when things get too heated? Aren’t they the ones that paid 100 cents on the dollar for underwater virtually worthless sub-prime mortgage bonds under the ruse that the funds paid for the bonds was the fastest way to get money into the economy?

So… why is the Fed so concerned about a homeowners right of rescission when the banks were originally the ones who over stepped their bounds? The answer is pure and simple! The Fed is a wolf in sheep’s clothing. They are not concerned about you and me. They are there to protect their own turf. They are there to protect the big banks and Wall Street interests.

The Fed is concerned that if the consumer truly begins to catch on that their statutory and constitutional rights have been abridged on a systematic basis, many banks would likely no longer pass the very financial stress tests that the Fed put in place to ensure that the economy dos not collapse. How ironic. Set up new tests and then bend the rules so that the banks can continue to cheat the system.

The Fed siding with the banks over the consumers is not new. Why is it that every government program to help homeowners has failed to date? First it was going to be a cram -down provision change in the bankruptcy code, then wide-spread modifications, then under-water refis! None of these proposals have worked and won’t work because the Fed has been too concerned with consumers taking matters into their own hands. Until now I had only surmised that that was what was going on… but this time the Fed went too far by openly letting us all know where they truly stand.

The New York Times says it best:

The Fed failed to protect consumers before the financial crisis, and is failing again.

I think it’s a shame that a well scholared man like Ben Bernanke who is the utmost expert on how the government re-stimulated the economy during the Depression could have become so co-opted. I have four words for Mr. Bernanke:

DO YOUR JOB BEN!

From the Trenches,

Roy Oppenheim

There is something so deeply wrong and disturbing with the current foreclosure crisis.

Simply: While most of us have some opinion as to the foreclosure mess, many don’t seem to care about the incredible amount of fraud that has occurred and continues to take place each day.

Some argue that people who fail to pay their mortgages, regardless of their reasons, are “deadbeats.” But, what about the fact some of the largest and wealthiest banks are missing documents used to remove people from their homes? And, in our “rocket docket” State of Florida, there are retired judges who are merely rubber stamping the foreclosure papers filed by the lenders’ firms without actually reviewing the merits of each case?

In Matt Taibbi’s rather eye opening and disturbing article Courts Helping Banks Screw Over Homeowners appearing in Rolling Stone Magazine November 10 issue, he recounts a day of going to a Jacksonville court and experiencing first hand the outrageous and flagrant rubber stamping of cases without judicial review.

Shouldn’t it matter that many of these cases result in people being forced to leave their homes when the very banks in question can’t even produce the documents needed to prove their case? Isn’t it a bit odd that these wealthy banks are not being subject to the same level of scrutiny?

Or is this politics as usual? After all, many of these banks sold the mortgages of people to “investors” –other banks or trusts. And, many of those trusts do not have the documentation to prove they have the original documents. Wall Street, in fact, was part of this process and made huge sums of money.

And, what about the fact that banks have broken into homes that are in foreclosure? Where is the punishment called breaking and entering?

While each of us has a responsibility to pay our debts, there has to be some accountability by the banks for creating an environment where many people borrowed too much and where they themselves have not responsibly acted. Ironically, our government spent billions to bail out the banks who, for the most part, have acted without impunity in this foreclosure nightmare.

Will the government bail out the homeowner? Or will the massive fraud that is now being exposed, and yet used everyday in court, continue to be ignored?