[ Ed. Note: The following is reposted in its entirety. It was written by entrepreneur / MBA / attorney Charles Seavey. I reprinted this from a discussion group in LinkedIn. In the article, Charles talks about the hundreds of billions in bad mortgage debt held by the the Federal Reserve. He advocates going after those who wrote bad loans, engaged in predatory lending or committed gross negligence in properly documenting and packaging loan document (think “robosigning”). We agree.
Our firm, Mahany & Ertl, has filed the largest false claims act case in history against Allied Home Mortgage Corporation for fraud. On November 1st, the Unites States government and HUD joined our suit and are now suing Allied for $2.4 billion on behalf of the taxpayers.
We invite other whistleblowers to come forward. A successful false claims complaint may result in you receiving an award of 20% or more of what the government recovers. Short of handcuffs and prison cells, the only thing that captures Wall Street’s attention is taking their money. If you have information on Allied or any Wall Street scam, call us. The call is confidential. For more information contact attorney Brian Mahany at (414) 704-6731 (direct) 0r by email at ]
by Charles Seavey
The Federal Reserve owns $849 billion in mortgage-backed securities. Total reserves are $2,872 billion, so mortgage-backed securities comprise 30% of reserves. (No wonder the dollar can’t bounce, even with Europe falling apart.)
To give a sense of the scale of this unprecedented investment in questionable private securities, currency in circulation is $1,052 billion so the Fed owns almost as many mortgage-backed securities as there are dollars in existence.
These mortgage backed-securities, we now know, are thoroughly fraudulent. They don’t have legal recourse to the underlying mortgages, which were never properly transferred into the trusts. Second, even to the extent that the Federal Reserve owns any of the mortgages that it thinks it purchased, those mortgages were extended on the basis of fraudulent underwriting (including forged income verification and the like), predatory lending, and fraud in the securitizations regarding the underwriting characteristics of the pools. Finally, any equitable ownership interest that the Fed used to have in the mortgages has by this point been further obscured and sullied by widespread forgeries on the part of the servicers and lawyers for the trusts. Accordingly the Fed bought $849 billion in joke fraudulent private securities that were the subject of at least four different levels of criminal and fraudulent behavior.
What are the implications of this unprecedented situation?
One is that the Fed must disclose which specific mortgage-backed securities it purchased on behalf of the American people.
A second is that the Fed must pursue securities fraud claims on behalf of the American people for $849 billion.
If Federal Reserve officials fail to do these things, they become accomplices-after-the-fact. As extreme as this sounds, the law is clear and Federal Reserve officials have no immunity protections. If the Fed does not pursue damages on behalf of the American people, they become part of a conspiracy and cover up where the Fed’s role was to buy up and hide the evidence.