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U.S. Sues To Recover $446 Million From Hezbollah-Connected Firms

The Justice Department says U.S. car buyers were sent at least $329 million to purchase used vehicles shipped to Africa, where they were sold as part of a scheme to launder drug-trafficking profits through Lebanon using security provided by Hezbollah.

ANWAR AMRO/AFP/Getty Images file photo

Federal prosecutors fired another broadside Thursday in a massive case accusing the Hezbollah militant group of financing itself through the global drug trade, filing a civil money laundering case against a Lebanese bank and a network of Hezbollah-connected companies, including U.S. shipping and used-car firms.

The 66-page complaint filed by the U.S. Attorney in the Southern District of New York details a sprawling conspiracy in which Hezbollah figures and their associates in the United States, Lebanon, Africa and South America allegedly generated and laundered hundreds of millions of dollars from cocaine smuggling.

The complaint seeks $446 million in forfeiture assets from the companies, including the Lebanese Canadian Bank SAL of Beirut, which allegedly served until this year as the hub of an illicit financing apparatus that pumped drug cash into the coffers of Hezbollah. The bank, already hit by U.S. Treasury Department sanctions in February, allowed Hezbollah figures to move huge amounts of cash with little or no oversight, authorities say.

U.S. Drug Enforcement Administration agents believe the Shiite militant organization, a powerful force in the Lebanese government despite its bloody history of terrorism against the West and Israel, received at least $100 million a year from the criminal enterprise, according to a U.S. antidrug official.

“The intricate scheme … reveals the deviously creative ways that terrorist organizations are funding themselves and moving their money, and it puts into stark relief the nexus between narcotics trafficking and terrorism,” U.S. Attorney Preet Bharara said. “Today, we are putting a stranglehold on a major source of that funding by disrupting a vast and far-flung network.”

The federal complaint describes an alleged U.S. money laundering wing of an operation that a long-term global investigation by the DEA had targeted. The case resulted in the indictment Tuesday of Ayman Joumaa, an accused Lebanese drug kingpin described as a top Hezbollah financier and money laundering specialist. Joumaa, who is believed to be in Lebanon, was charged with smuggling hundreds of millions of dollars of cocaine into the United States in partnership with a Mexican cartel.

The evidence unveiled Thursday lays a foundation for other potential prosecutions of Hezbollah figures overseas — mainly suspects allegedly involved in cocaine smuggling through Africa to Europe — because it alleges a U.S. nexus, the antidrug official said.

During the past four years, the Lebanese bank and other firms, including two money exchange houses run by Joumaa, wired at least $329 million to about 30 car buyers in the United States to purchase used cars that were shipped primarily to similar businesses in the African country of Benin, the complaint says.

Proceeds from car sales in Africa went to Lebanon along with tens of millions of dollars in illicit cash from sales of cocaine in Europe by Hezbollah-connected traffickers based in Benin, Ghana and Togo, the complaint says.

“Hezbollah security facilitates the receipt of cash flown into the Beirut International Airport,” the complaint alleges. “For example, money couriers are sometimes instructed over the public address system to deplane first, and are then escorted to private rooms in the airport where the cash would be received.”

Prosecutors allege that a key figure in the conspiracy was Oussama Salhab, a Lebanese businessman who lives in Togo but owns Cybamar Swiss Gmbh, a Detroit-area international transport company that shipped many of the used cars to Africa.

“Salhab is a Hezbollah operative,” the complaint alleges. It describes an aborted U.S. visit by Salhab in 2009 in which he arrived at the Detroit airport and was questioned by border inspectors. Examination of his fingerprint-encrypted laptop found “images of Hezbollah Secretary General Hassan Nasrallah; audio of the Hezbollah national anthem; images of Hezbollah militants stomping on an Israeli flag; and movie files of executions, hangings, torture and beheadings,” the complaint says.

Salhab decided not to enter the United States and returned to Togo, where he oversees vast money laundering and cash-smuggling networks, the complaint states. It identifies one of his close associates as Imad Zbib, a used-car dealer who is “a prominent Hezbollah representative in Togo” and “narco-trafficker.” Zbib’s organization has transported multi-ton maritime shipments of cocaine from South America to Togo, where it continues to Europe concealed in shipments of used cars, according to the complaint.

Reached by phone Thursday, a manager at the Detroit headquarters of Salhab’s transport company declined comment but said a public relations official would eventually respond to the charges.

The complaint seeks to have 30 used-car companies — many of them in Michigan but also in states such as Tennessee, Maryland and Connecticut — forfeit assets. In contrast to the allegations against Salhab, antidrug officials said, it is not clear the extent to which the car buyers knew they were involved in an international scheme linked to drugs and terrorism.

“Examination of his fingerprint-encrypted laptop found ‘images of Hezbollah Secretary General Hassan Nasrallah; audio of the Hezbollah national anthem; images of Hezbollah militants stomping on an Israeli flag; and movie files of executions, hangings, torture and beheadings’”

Is this a joke?  How did they get into his laptop without his cooperation and/or why did he cooperate?  Who keeps audio of their national anthem on their laptop?  How do we know the flag-stompers are Hezbollah militants?  Who cares if one foreigner stomps on another foreign flag?  And what kind of idiot brings an incriminating laptop overseas through customs!?

This is either cartoonishly racist or a scam.

And I’ll say again that this whole global drug conpiracy concept stinks of something, if only because money laundering isn’t this difficult.  If this is all part of one system, then the people behind it are overcomplicating things to an absurdly risky degree.

It sounds like they want to get caught, in fact.

Are we going to get something back from Israel for all of this expense?  Like an end to their illegal settlements?  (And don’t tell me I’m a “jew hater” for saying that; there are a potful of people in Israel who also think those settlements are wrong.)

Jeremy Lazarus

Dec. 16, 2011, 2:54 p.m.

Alas, poor car dealers. First they had a windfall. If they’re legit, they’ll be spending much of that income defending themselves.

Not fun when you are innocent and have to pay for lawyers to protect yourself.

We’ll have to wait for the courtroom grind to find out if the government got it right or is just, as is all too typical, overreaching to make a case.

Anyone who doubts the global impact of dirty money needs to wake up and get the facts. Money laundering isn’t hard to do; but the way anti-money laundering efforts are set up, catching the money launderers is ridiculously difficult. Now that our banksters have, perhaps, lost some of their influence, anti-money laundering efforts—as the best way to cripple terrorism as well as drugs, arms and human trafficking—might make some headway. American banks have, especially since the passage of NAFTA, profited immensely from the drug trade as well as other sources of dirty money.

I am happy to realize that a many wise persons are joining in evolving contemporary medias like pioneering ProPublica’s. There will always exist rich and poor guys but only the thoughts of wise minds -next year may guarantee that each hard working global citizen will be out of poverty in all corners of the ensuing new world of men-made better policies and humanity focused impartial regulations -free of personal gains of extremely greedy private and corrporate businessmen.



Shahislam

Banning trades of unnatural killer: weapons and legalizing natural killer: vegetables of uncontrollable drugs will be a biggest blow for the secret giant networks of terroristically motivated guys with animal-like small minds.
I am happy to realize that a many wise persons are joining in evolving contemporary medias like pioneering ProPublica’s. There will always exist rich and poor guys but only the thoughts of wise minds -next year may guarantee that each hard working global citizen will be out of poverty in all corners of the ensuing new world of men-made better policies and humanity focused impartial regulations -free of personal gains of extremely greedy private and corrporate businessmen.
.

probably a lot easier to criminally prosecute parties connected with Hezbollah-  than the banks in the usa who committed fraud on CDO’s conveyance and origination

- makes sense !

Barry Schmittou

Dec. 16, 2011, 9:33 p.m.

The indictment of Lebanese Drug Kingpen Ayman Joumaa seen in this ProPublica article provides additional proof that the U.S. Government is protecting deadly corporate crimes in refusing to prosecute American crimes including Wachovia laundering $378 billion and Bank of Amerrica laundering $3 Billion for the Mexican cartels that have killed approximately 40,000 people since 2006.

If Ayman Joumaa had made enough campaign contributions like Wachovia and the other corporations seen at http://www.obamadrugmurdersconnection.blogspot.com I believe there is a good chance he would have never been referred to a Grand Jury and indicted.

Obama, Hillary Clinton and other politicians from both parties received $1,268,970 in Contributions from Wachovia and its Employees!!

Here’s a quote from England’s Guardian Observer News:

“At the height of the 2008 banking crisis, Antonio Maria Costa, then head of the United Nations office on drugs and crime, said he had evidence to suggest the proceeds from drugs and crime were “the only liquid investment capital” available to banks on the brink of collapse. “Inter-bank loans were funded by money that originated from the drugs trade,” he said. “There were signs that some banks were rescued that way.”

Bank of America laundered drug money too. The New York Times wrote :

“Bank of America acknowledged its lax operations allowed South American money launderers to illegally move $3 billion through a single Midtown Manhattan branch, closing the latest illicit-finance investigation brought by Robert M. Morgenthau, the Manhattan district attorney. No indictment was sought “because we don’t want to put banks out of business,” Mr. Morgenthau said.”

http://money.cnn.com/2011/11/14/news/companies/boeing_emirates/index.htm?hpt=hp_t2

Leaders of both political parties are protecting deadly campaign contributors by pretending they are too big to prosecute !! Drug money has so much control of the worlds governments and financial institutions I believe every human being who has ever died due to their addiction is actually a murder victim !! Powerful drugs that many humans cannot resist have been flooded into the U.S. and world for many decades !!!!

A 12 year old San Diego Boy was recently kidnapped in Mexico by a drug cartel. He was forced to decapitate four people !!!!!!

http://www.msnbc.msn.com/id/21134540/vp/45054253#45054253

Bloomberg news wrote :

“It’s the banks laundering money for the cartels that finances the tragedy,” says Martin Woods, director of Wachovia’s anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia’s branch network.

CNN wrote :

“Two mangled bodies hanging like cuts of meat from a pedestrian bridge. A woman was hogtied and disemboweled, her intestines protruding from three deep cuts on her abdomen. Mexico’s notoriously ruthless drug gangs regularly hang victims from bridges and highway overpasses.”

Here’s a quote from Huffington Post :

MEXICO CITY — Suspected drug traffickers dumped 35 bodies at rush hour beneath a busy overpass in the heart of a major Gulf coast city as gunmen pointed weapons at frightened drivers.

Farmers on the border live in fear as seen in these quotes from an NBC Story linked at :

http://www.msnbc.msn.com/id/45440385/ns/nightly_news

“I’m a little nervous being here right now. Definitely don’t come down here after dark.”

“The farmer said a federal law enforcement agent told him to buy a bulletproof vest to use while working in his fields.

“The Obama administration and many local officials have said the U.S.-Mexican border is safer than ever and that reports of violence on the American side are wildly exaggerated. But the farmer scoffed at that argument. “I walk this soil every day and have since I was old enough to come out on my own,” he said. “In this part of Texas, it is worse than it’s ever been.”

(In the recent Gun Walking scandal, Obama’s ATF allowed the Mexican cartels to smuggle thousands of guns into Mexico)

American Express Bank International and Western Union also laundered drug money and no one was prosecuted.

When considering Wachovia’s $378 Billion laundered, please remember that on 5/13/2010 USA Today wrote :

“To date, Pentagon spending in Iraq has reached $620 billion, compared with $190 billion in Afghanistan.”

Also remember the largest deal Boeing Aircraft ever made is $18 Billion as seen in recent quotes from CNN

Increase in Legal U.S. Gun Sales to Mexico is Arming Cartels

http://www.cbsnews.com/8301-500202_162-57337289/legal-u.s-gun-sales-to-mexico-arming-cartels/?tag=stack

AIG, JP Morgan Chase, MetLife, Prudential, Unum, rigged huge bids and no one was prosecuted as seen at :

http://www.obamadrugmurdersconnection.blogspot.com

Very poorly written articles and like your answer David!
USA has lots of Money Laundering, gangs, banker compliance with cartels and even Government selling guns to them.  So, go after Hezbollah first??? IF it’s even true.  Go after our Reserve, our thieves in Gov’t., bankers, financers, many investors…all in the USA .

It makes one pause and wonder if the whole dispute over closing the borders to illegal immigration is just a ruse to keep them open for the the drug trade.  There are always ways to increase immigration legally to supply workers for specific types of work that we need done. 

To really close the borders as was done in San Diego would mean that the drug smugglers would have an even greater challenge getting drugs accross the border. 

In reality we owe it to ourselves and the thousands of innocent Mexicans who are losing their lives to close the border tight and starve the beast that is the drug cartels and not use the immigration issue to keep them open. 

We are being suckered.

For those of you who still think the banks were at fault for the mortgage crisis you really need to do some fact checking for yourselves.  There really isn’t enough space here to explain it to you, not that you would believe me anyway.  I’ve been in the mortgage business for over 20 years and was there when this fiasco started. 

You can research for yourselves who regulates the banks and who dictates what loans are approved.  Further, Fannie and Freddie are the ones that package most of the loans into securities and decide what the loan approval criteria are.  In addition, Congress is the entity that controls Fannie and Freddie. 

And to clarify further, banks are afraid to blink without approval from the government and are also intimidated into doing things that they would not do if it were really up to them.  For example, Bank of America buying Countrywide and Merrill Lynch was not their idea of a great investment.  Believe me, they were forced into taking over those companies.

Urata - you are obviously a propagandist for the gangster bankers -  mortgage bankers / commercial bankers / investment bankers / and their minions who supported their fraudulent practices

The FBI began warning of an “epidemic” of mortgage fraud in its congressional testimony in September 2004. It also reports that 80% of mortgage fraud losses come when lender personnel are involved in the fraud. (The other 20% of the fraud would have been impossible had these fraudulent lenders not suborned their underwriting systems and their internal and external controls in order to maximize their growth of bad loans.)

Ms Foster last week on 60 minutes spoke of - SYSTEMIC FRAUD - at CW where she was head of compliance and then same condition at citibank reported with the same class of complaince officer gave same testimony that -  70 % of portfolios out of policy standards - both of these banks went off the air due to their own FRAUD policies not government mandates

the GSE’s BOUGHT loans - they didnt originate as you say - the banks did - everyone knows that - but you -  need to commit lies in pursuit of the perpetuation of your propaganda program


the banks have now several states CA / NEV / NY / Del / Mass all in pursuit of various approaches which will lead to RICO claims

get a life !

John; Your typical reaction shows lack of understanding. That’s why you stick to marginal facts and ignore the main fact of black market engineering.

ibsteve2u; You’re forcing yourself to involve Israel in the case. Israel is not part of your story. There are criminals that breaking the US law and the reaction of US law inforcment agents. What you sugest is that the more the Hisbullah braeks US laws the more Israel will pay you. Are you serious?

Is there much difference between the heads of Hezbollah or Iran and Israel, IN TERMS OF TERRORISTICALLY REACTING MINDSET?

Since Iraki war undertaken because of official lies from US security services endorsed by highest US authorities, nobody can ever believe anymore in any of the statements and fabricated proofs produced by any US security service or any US justice authority at whatever level.

So, a man like Obama is capable of correcting the problems and doing the right things to get back the trust of global public! Many thanks to wise guys.

Shahislam; There is much difference between Hezbollah / Iran and Israel.  Hezbollah and Iran are extreme fanatic Shiite terror forces that want to expand their terror revolution and occupy areas of influence, to kill all the “Kefirs” (heretics), to annihilate Israel from the face of the earth and threaten by nuke on Sunni Arab countries, mainly on the Arab gulf, and on Europe and the US.
Israel, although said that she has nuke, never threaten to annihilate no one, even when attacked by Islamic “peaceful” coalitions.

I think that Obama well understand this and act accordingly by enforcing the security ties with Israel.

Thanks AbeBird,
With respect I can see your point! I think, we both are right from our angle of views.
In my understanding, the hatred and fighting, “based on old blind beliefs -generated by rumors” when in fact, there didn’t exist anything like politics of this century, is stupid. Heresy against another heresy, all in the vulnerable belief system of human’s mental faculties, trying to intimidate each-other now with ‘dumb and useless Nuke-propaganda’ etc. are more or less products of smaller minds that are compare-able with basic animal instincts.
The mental image of nuke can only terrorize terroristic minds but can cause insignificantly very little harm in reality, therefore, wise ones can only smile when watching the egoistic wars of non-sense anger, although sometimes bloody at the expense of innocent but blind-believers in paradisical fiasco! Hell and heaven are surely (if one believes: nowhere to be found by after a human body becomes atomic particles and chemicals after death) here on this Earth too.

Time is ahead for border lifting and thousands of ‘to be financially independant by hard work and not by wealth manipulating politics only’ -global municipalities to become part of and share one world with wealth differences based on how hard it’s citizens work (e.g. a lazy Bangladeshi or Somalian cannot expect to have same luxurious lifestyle that a hard working German or Israeli deserves to have.

All these insatiably demanding, blind Jerusalem-temple lovers of Semetic origins, if fails in the ensuing new world to become naturalized in oil-rich places like Mecca (God definitely is not against naturalization, just like Western Humanitarian heads of Land pieces) or if do not like to find new places of opportunity in the oil-rich deserts or elsewhere, have no choice but to stop “thousand years’ long crying and complaining”; and share a large piece of Arab lands without borders.
Surely the smart Jews (partial) are always capable of building a new Israel elsewhere in the world but not the ‘parasitic dumb ones’ that want everything for free and never through own hard labour but by nagging and complaining (Humanly sympathy shown to beggers that can never be choosers, will only encourge growth of parasitical and bacteria type diseases or terrorists and that’s how Cosmic system is set with only 50% human control on it). All the Public of Arab lands, including Israelis, Palestinians with enough awareness of the facts- I am writing about, are able to see the * “lights” in there-what I am talking about for a long time but not their near-sighted dumb-bullying leaders. (Please take it easy, because I am expressing my sincere feelings while trying to do it without being prejudiced.) 
I strongly believe: no US president ever had better understanding of the matter -I briefly explained above, than Mr. Barack Obama does.

Bottom line, anything to distract the American people from the fact that nearly all of the money used by Middle Eastern terrorists (no matter who they are or what politics they profess) as well as the money that arms the nation states that periodically or always threaten Israel comes from oil dollars.

Revised copy:
Thanks AbeBird,
With respect I can see your point! I think, we both are right from our angle of views.
In my understanding, the hatred and fighting, “based on old blind beliefs -generated by rumors” when in fact, there didn’t exist anything like politics of this century, is stupid. Heresy against another heresy, all in the vulnerable belief systems of the humans’ mental faculties, trying to intimidate each-other now with ‘dumb and useless Nuke-propaganda’ etc. are more or less products of smaller minds that are compare-able with basic animal instincts.
The mental image of nuke can only terrorize terrorist-like minds but can cause insignificantly very little harm in reality, therefore, wise ones can only smile when watching the egoistic wars of non-sense anger, although sometimes bloody at the expense of innocent but blind-believers in paradisaical fiasco! Hell and heaven are surely (if one believes: nowhere to be found by after a human body becomes atomic particles and chemicals after death) here on this Earth too.

Time is ahead for border lifting and thousands of ‘to be financially independent by hard work and not by wealth manipulating politics only’ -global municipalities to become part of and share one world with wealth differences based on how hard it’s citizens work (e.g. a lazy Bangladeshi or Somalian cannot expect to have same luxurious lifestyle that a hard working German or Israeli deserves to have.

All these insatiably demanding, blind Jerusalem-temple lovers of Semitic origins, if fails in the ensuing new world to become naturalized in oil-rich places like Mecca (God definitely is not against naturalization, just like Western Humanitarian heads of Land pieces) or if do not like to find new places of opportunity in the oil-rich deserts or elsewhere, have no choice but to stop “thousand years’ long crying and complaining”; and share a large piece of Arab lands without borders.
Surely the smart Jews (partial) are always capable of building a new Israel elsewhere in the world but not the ‘parasitic dumb ones’ that want everything for free and never through own hard labors but by nagging and complaining (Humanly sympathy shown to beggars that can never be choosers, will only encourage growth of parasitical and bacteria type diseases or terrorists and that’s how Cosmic system is set with only 50% human control on it). All the Public of Arab lands, including Israelis, Palestinians with enough awareness of the facts- I am writing about, are able to see the * “lights” in there-what I am talking about for a long time but not their near-sighted dumb-bullying leaders. (Please take it easy, because I am expressing my sincere feelings while trying to do it without being prejudiced.) 
I strongly believe: no US president ever had better understanding of the matter -I briefly explained above, than Mr. Barack Obama does.
 

Shahislam

@AbeBird who emoted:  “ibsteve2u; You’re forcing yourself to involve Israel in the case. Israel is not part of your story.”

lollll…I am “forcing” Israeli involvement?  Now all you have to do is convince the reader that Hezbollah’s goal is the eviction of the American people from Palestine.

David, You can originate loans all day long but if you can’t sell the loans (if they don’t meet guidelines) the bank can’t portfolio all of them.  Soon the bank wouldn’t be able to do any more loans.  Fannie, Freddie, FHA, et al are the ones that set the guidelines.  Why don’t you actually look into how the real world works before you make statements about things you know nothing about.

Urata-

please - the GSE never issued fraud guidelines - you know that - the banks took it upon themselves -  especially the regulated banks -  to create the standard - ORIGINATING - means what the word says -  further - the loans were sold to many other parties other than GSE’s - pension funds / foreign investment houses - obviously they didnt issue fraud guidelines to the US banks ???- no -  your friends took it upon themselves to create fraud standards

dont promote me -  your embarassing yourself

small sample of the work of your peer group:

In the summer of 2007, a team of corporate investigators sifted through mounds of paper pulled from shred bins at Countrywide Financial Corp. mortgage shops in and around Boston.
By intercepting the documents before they were sliced by the shredder, the investigators were able to uncover what they believed was evidence that branch employees had used scissors, tape and Wite-Out to create fake bank statements, inflated property appraisals and other phony paperwork. Inside the heaps of paper, for example, they found mock-ups that indicated to investigators that workers had, as a matter of routine, literally cut and pasted the address for one home onto an appraisal for a completely different piece of property. 

Foster began a three-year battle to clear her name and establish that she and other employees had been punished for doing the right thing. Last week, the U.S. Department of Labor ruled that Bank of America had illegally fired her as payback for exposing fraud and retaliation against whistleblowers. It ordered the bank to reinstate her and pay her some $930,000

Countrywide’s drive to boost loan production encouraged fraud, for example, on loans that required little or no documentation of borrowers’ finances, according to a lawsuit by the Illinois attorney general. One former employee, the suit said, estimated that borrowers’ incomes were exaggerated on 90 percent of the reduced-documentation loans sold out of his branch in Chicago

“THE REAL WORLD”

David, Check this out: “Currently, Fannie Mae and Freddie Mac control about 90 percent of the nation’s secondary mortgage market.” You can find that statement at this web page from George Mason University’s History News Network.  http://hnn.us/articles/1849.html

I can’t speak to Countrywide’s actions but I do know that if the GSE’s and others wanted to, they could have been holding the underwriters more accountable just as they did before 2002 and how they are holding them accountable now.  You are assuming the regulating government agencies were asleep at the wheel.  I have news for you, they weren’t, they were in cahoots.

the mortgage / and commercial banks “sold” the protfolios - garbage-  “they” created / originated - they committed fraud - the portfolios from one end of the world to the other are not and were not triple AAA never were intended to be - the GSE’s did not set the standard for committing fraud - that is why they are getting “put back” the loans from pension funds / GSE’s / foreign banks - because they can “prove’ they were not as represented - see settlement recently with BoA as just one - same with citi - see Judge Rakoff comments - you dont address cut and paste at CW - youre playing games which is what trolls do all the time never ever facts always generalizations, slogans and opinions - you should get off the board you dont belong in any place you cant compete with facts and logic and honesty

why not go out and get a job instead of trolling for the criminal bankers

Urata - this below doesnt sound like the GSE’s were directing traffic ????

why would you = condone / approve / minimize / trivialize / excuse / disassemble / create diversion——-> of fraud by the banks ? unless you are part of the fraud somewhere in the end to end process of discrete actions which were fraud - in and of themselves -  no less the creation of phony AAA portfolios - why do you never address specific facts ? why do you offer no logic ?

where is the GSE direction here? - “analyze this”:

In 2009, the Securities and Exchange Commission filed a fraud suit against Mr. Mozilo and other former executives in Los Angeles federal court, alleging they hid from investors the risks of Countrywide’s subprime mortgage portfolio. One SEC court filing also asserted that Mr. Mozilo personally approved loans that didn’t conform with company lending practices to favored borrowers through the VIP program, also known within Countrywide as the “Friends of Angelo” program.

Thinking the quasi-government agencies that are Fannie and Freddie were just following Republican orders…

Excerpt from President George W. Bush speech to HUD Employees
on National Homeownership Month given in Washington, DC on Tuesday, June 18, 2002

“We are here in Washington, D.C. to address problems. So I’ve set this goal for the country. We want 5.5 million more homeowners by 2010—million more minority homeowners by 2010. (Applause.) Five-and-a-half million families by 2010 will own a home. That is our goal. It is a realistic goal. But it’s going to mean we’re going to have to work hard to achieve the goal, all of us. And by all of us, I mean not only the federal government, but the private sector, as well.

And so I want to, one, encourage you to do everything you can to work in a realistic, smart way to get this done. I repeat, we’re here for a reason. And part of the reason is to make this dream extend everywhere.

I’m going to do my part by setting the goal, by reminding people of the goal, by heralding the goal, and by calling people into action, both the federal level, state level, local level, and in the private sector. (Applause.)

And so what are the barriers that we can deal with here in Washington? Well, probably the single barrier to first-time homeownership is high down payments. People take a look at the down payment, they say that’s too high, I’m not buying. They may have the desire to buy, but they don’t have the wherewithal to handle the down payment. We can deal with that. And so I’ve asked Congress to fully fund an American Dream down payment fund which will help a low-income family to qualify to buy, to buy. (Applause.)

We believe when this fund is fully funded and properly administered, which it will be under the Bush administration, that over 40,000 families a year—40,000 families a year—will be able to realize the dream we want them to be able to realize, and that’s owning their own home. (Applause.)

The second barrier to ownership is the lack of affordable housing. There are neighborhoods in America where you just can’t find a house that’s affordable to purchase, and we need to deal with that problem. The best way to do so, I think, is to set up a single family affordable housing tax credit to the tune of $2.4 billion over the next five years to encourage affordable single family housing in inner-city America. (Applause.)

The third problem is the fact that the rules are too complex. People get discouraged by the fine print on the contracts. They take a look and say, well, I’m not so sure I want to sign this. There’s too many words. (Laughter.) There’s too many pitfalls. So one of the things that the Secretary is going to do is he’s going to simplify the closing documents and all the documents that have to deal with homeownership.

It is essential that we make it easier for people to buy a home, not harder. ”

And from that same Bush speech, the kicker:

“And so, therefore, I’ve called—yesterday, I called upon the private sector to help us and help the home buyers. We need more capital in the private markets for first-time, low-income buyers. And I’m proud to report that Fannie Mae has heard the call and, as I understand, it’s about $440 billion over a period of time. They’ve used their influence to create that much capital available for the type of home buyer we’re talking about here. It’s in their charter; it now needs to be implemented. Freddie Mac is interested in helping. I appreciate both of those agencies providing the underpinnings of good capital.”

Or should I have said “kick-off”, as in “the kick-off of the mortgage-backed securities pyramid scam”?

Fannie and Freddie were put into play by the Republicans.  There is a difference between creating agencies which can be exploited - which the Democrats helped to do - and being crooked enough to actually arrange for their exploitation.

That latter…that is all Republican.  “Just business!”, ya know.

David, you keep wanting to cite individual loans that were fraudulent.  I’m speaking of the systemically lax rules that were instituted by the government and their lackeys.  There will always be individuals in any system that do bad things.  Look at all the illegal and irresponsible things going on in government.  Underwriters, in general, are very diligent in their review of files because they can be personally liable if they do not meet guidelines.  You obviously want to believe as you do because you are not in the industry and cannot see how most of the professionals in the mortgage business try to adhere to the rules. 

You must be a big government lib trying to hold government harmless for any role they might play in nefarious acts.  Just admitting that there were “Friends of Angelo” in government is an admission that they were in collusion at the very least.

Steve - your post is silly in the extreme and disingenous to boot

IF SOMEONE TELLS YOU TO JUMP OFF THE BROOKLYN BRIDGE- DO YOU?

ill answer for you - NO - the “promotion” by bush has nothing to do with committing fraud - where does it say to commit FRAUD for a national objective in his speech?

cut and paste mortgage applications by CW - for ONE example - are a fraud on the buyer of the mortgage - that is why the buyers are getting judgments or settlements -(see BoA $7 billion - see Judge Rakoff - citibank)

show me - show me - show me - where that was authorized by government or anyone other than mozillo or other bank personnel - and you get the prize

make my day !

the same fraud is true across the board - CW / Wamu/ chase / Citi / GS / et al - you are playing games - this is not a rogue employee - as foster said at CW and citi exec compliance - it was “systemic”

this was not rogue employees - that is why the judgments are coming now and AG’s are in motion - ny / nev / ca / mass / del - because they can prove rico claims - which means systemic

you people have lost control of the dialogue and you are desperate - so desperate people do desperate things

there are people retiring and getting laid off every day - appraisers / processors / lawyers / bankers / clerks / robo signers / computer programmers -  who know the details and are in the pipeline

turn your self in !

steve / urata - “underwriting systems”  - MEANS SYSTEMIC

take your promotion elsewhere find some sheeple who will buy your game

The FBI began warning of an “epidemic” of mortgage fraud in its congressional testimony in September 2004. It also reports that 80% of mortgage fraud losses come when lender personnel are involved in the fraud. (The other 20% of the fraud would have been impossible had these fraudulent lenders not suborned their underwriting systems and their internal and external controls in order to maximize their growth of bad loans.)

And never the twain shall meet.  We are arguing past each other.

urata - you said - “And never the twain shall meet.  We are arguing past each other”

no we are not - YOU are dishonest - i have proofs which you ignore repeatedly - major difference - pure and simple signal - you never advance logic or facts ONLY generalization / slogans / diversions / promotions of various kinds

never address the facts - WHY? because the emperor has no clothes

the real question for you - is - your criminal participation - now and when you were in the mortgage industry - “congenital” then its not totally your fault - since that means your parents were probably criminals as well

Bernie Madoff’s mother was a securities fraudster - so he knew the game from birth - did you have the same advantage?

lolll…you think small, david.

steve - you said: “you think small”

is meaningless - in fact the opposite is true - “you” and your co player want to MINIMIZE the various forms of fraud and their effect on the public -

minimize means “small” - you cant even be honest on your characterization of your statements

put up some facts not continuous promotion - accept the fraud label and buy a tee shirt - promoting your version

@david -  I have never disputed the massive amounts of fraud that occurred throughout much of the loan origination industry. 

I’m just just saying that was only part of the problem…the “front-end”, you might say.  If my posting of Bush’s speech wasn’t enough, consider that the Bush administration was full of GS alumni; consider that GS eventually made another boatload of money betting against those same securities they were packaging; consider that oil speculation was running rampant; consider that the banks themselves - especially those banks who were dealing in those “financial instruments” - were speculating in oil and driving the price up; consider that the Bush Administration refused to do anything about the speculation in oil.

Consider that it doesn’t take a genius to predict what will happen if you give a bunch of loans (particularly ARMs) to people who really can’t afford them and then drive the price of a commodity that is inescapably essential to those same marginal mortgage holders into the stratosphere. 

Dan Dicker observed in his book Oil’s Endless Bid (and I am actually re-quoting - albeit with a different spin - from the Pragmatic Capitalism website at http://pragcap.com/oils-endless-bid  ):

Quote:

“In the mid-1990′s, the participants and performance of oil trading slowly started to change, and by 2003, the dominating forces in oil trader were no longer with the oil companies.  The list of NYMEX seat owners again shows just how deep the change was.  Right before going public in 2006, only 22 seats remained in the hands of the oil companies that had direct involvement in the buying and selling of oil and oil products.  But a much more significant percentage of seats were owned by companies that ostensibly had nothing to do with the buying and selling of physical oil.

BNP Paribas: 9 seats
AIG: 6
Merrill Lynch: 5
Bank of America: 4
Barclays: 4
Citigroup: 4
Deutsche Bank: 4
JP Morgan: 4
Morgan Stanley: 4
UBS: 4
Bear Stearns: 3
Goldman Sachs: 3
Lehman Brothers: 2

That’s a total of 56 seats owned by investment banks!  (And yes, I include AIG, which was an enormous booker of bets on oil too, not just in famously bad mortgage swaps.)”

End quote.

Harsh, to force so many would-be American homeowners into the position of choosing whether to pay the mortgage or buy the gasoline required to get to work to earn the money to pay the mortgage.

One of my mottos is “When the right speaks, the right lies.”  When I use it, it has an unspoken addendum “...which is a given.  The real trick is ascertaining the scope of their lies.”

steve - this is my issue with anyone who promotes that there were multiple causes of the housing meltdown - ALL rationalizations - are collateral damage not intrinsic to the real cause which is fraud

forget the idea of the promote ” the devil made me do it” (bush / GSE / barney frank) doesnt hold water

a cyclical downturn caused by economic activity winding down or oil prices going up or major disruption like sunami or katrina can be evaluated as to the contribution to the asset value generally going down from copper / lumber to housing prices

this downturn in housing values was overwhelmingly secular - that is a normal cyclical down turn yields price changes of 10-25% peak to trough

this situation where housing prices are down 52-69%  depending where you are - are due to the underwriting standards being deliberately subverted for the difference between the 10-25% and actual

The FBI began warning of an “epidemic” of mortgage fraud in its congressional testimony in September 2004. It also reports that 80% of mortgage fraud losses come when lender personnel are involved in the fraud. (The other 20% of the fraud would have been impossible had these fraudulent lenders not suborned their underwriting systems and their internal and external controls in order to maximize their growth of bad loans.)

the responsibility for getting the money back is ALWAYS the charge of the underwriter not the borrower

i never cared about the borrower when i made loans - and i made a lot of sub prime loans - all i ever did was make sure i lent on the basis of “my” selection of the appraiser, advance rate % and docs control - such that i never had a loss - this was my families funds so i was at risk

once the personal liability restraint was eliminated by the banks for loss or clawback or reps - the bankers were totally focused on bonuses and profits - and the easiest tool in the bag was fraud - that is why mozillo had cut and paste apps it didnt matter

so the collateral issues you raise of oil / bush / madates for housing for the people / GSE’s - are all smoke and mirror side shows

if you dont care to get the money back - that is the reason for the overwhelming amount of loss here and then they used the system to make the serious money on the NAKED short side with CDS cover on synthetics in the 100’s of billions - because they knew the portfolios were rigged to fail

the problem is that owners of housing that have 100% equity were fools - 50% equity were fools - 5% equity of some young kids who wanted a lawn to cut / kitchen to bake in and were starting out - had no idea that they all were being set up - all these people have a RICO massive claim for their loss - state by state - since the fraud was systemic and none of these people who still have jobs and are paying for upside down mortgages or disappearing equity value are at fault for the current value which is a overwhelmingly a function of the “secular” effect of price decline due to SYSTEMIC FRAUD on massive scale

  the reason nothing is getting resolved for principal reductions to match the market for many portfolios is that the asset owners recognize that the underlying docs are bogus and fatally flawed - as they go to foreclosure and they are challenged on granular basis - one by one - it comes out that the notes havent followed the mortgage / docs are phony / title chain doesnt exist / robo signers / phony appraisals

and as multiple foreclosures are correlated for specific portfolio it is then possible to show pattern where the mortgages are say 30-70% phony for the flaws as noted above - then the owner can come after the syndicator or the servicer - the 5 major banks for reps

but disccovery requires in many cases 25% ownership of a class so they need to stitch it together with multiple owners - all of which takes time to go after the banks and then demand “put back”

at the put back stage we then get resolution for the borrowers which largely hasnt happened yet because the banks dont want the admission of the scam

so we are in a quagmire - and this explaination doesnt include the call on the CDS as well - a whole other level of problems

so the problem with people who minimize their guilt like Orata - who was a mortgage banker - they know - unequivically -  the level of the fraud because it was pervasive and endemic and are promoting, lying - pure and simple

other than that i know nothing !

I would observe that widespread corruption is inevitably pushed from the top down…otherwise it is naturally isolated corruption.

exactly - which is why a RICO claim especially with pattern like mozillo created -  would be effective - which will have to be at the state level since obama is captured by the banks

its all there for the right state AG to be a national figure