On the same day that the
Bureau of Labor Statistics
reported that no new jobs were created in August, the banking
sector got slammed with a hat trick of bad press.
reports that despite ongoing legal action, major mortgage-holding
banks are still engaging in the fraudulent practice of
"robo-signing" - pushing through foreclosures without bothering to
confirm key pieces of information, like who actually lives in the
home or whether or not it's been paid off. Pat Garofalo of
points out that the practice has become so sloppy that as recently
as one month ago, banks were signing mortgages from one trustee to
another years after
parties went bankrupt or ceased to exist.
reports that the robo-signing practice isn't just still going on -
it actually started long before many suspected, with officials
discovering suspiciously similar and sloppy paperwork dating back
to the late '90s. "Because of these bad titles, property owners
can't prove they own the properties they think they bought, and
banks can't prove they had the right to sell them," Jeff Thigpen,
the registrar of deeds in Guilford County, North Carolina, told the
New York Times
broke the story that the Federal Housing Finance Agency is set to
sue "a dozen" of the country's biggest banks for lying about the
mortgages it securitized and sold to investors with AAA ratings.
The lawsuit will hit major players like Goldman Sachs (
), JPMorgan Chase (
) and the beleagured Bank of America (
), which has already endured a beating in the last few months of
In aggregate, these reports paint a picture of a banking industry
gone completely off the rails (as if that wasn't common knowledge),
cutting corners and flat-out lying about who owns which mortgages,
what they're worth and where they are stored. None of this is
really fresh news - the robo-signing scandal reared its ugly head
around this time last year, while the AAA ratings of garbage
mortgage-backed securities were called into question by many
investors - some of whom made a fortune when the subprime bubble
Still, these three stories landing on the same day as the dismal
BLS report is sure to stir up plenty of rage against Wall Street.
The real question is whether, in the face of the populist fury, the
government will find itself able to nail some of the biggest
campaign contributors to the wall.