Feed: The Warning Signs - AggScore: 91.6

"2016 Obama's America" - Movie Preview

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2016 Obama's America takes audiences on a gripping visual journey into the heart of the world’s most powerful office to reveal the struggle of whether one man's past will redefine America over the next four years. The film examines the question, "If Obama wins a second term, where will we be in 2016?"


Across the globe and in America, people in 2008 hungered for a leader who would unite and lift us from economic turmoil and war. True to America’s ideals, they invested their hope in a new kind of president, Barack Obama. What they didn't know is that Obama is a man with a past, and in powerful ways that past defines him--who he is, how he thinks, and where he intends to take America and the world.

Immersed in exotic locales across four continents, best selling author Dinesh D’Souza races against time to find answers to Obama’s past and reveal where America will be in 2016. During this journey he discovers how Hope and Change became radically misunderstood, and identifies new flashpoints for hot wars in mankind’s greatest struggle. The journey moves quickly over the arc of the old colonial empires, into America’s empire of liberty, and we see the unfolding realignment of nations and the shape of the global future.

Emotionally engaging, 2016 Obama’s America will make you confounded and cheer as you discover the mysteries and answers to your greatest aspirations and worst fears.

Chairman Obama's 2-million person Truth Team

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article from: RT.com

Desperate to win re-election, President Obama is taking inspiration from a tactic used by China’s Chairman Mao during so-called "Cultural Revolution."

In order to spread his ideology, he creates his own army of brainwashed propagandists who are supposed to popularize talking points sent to them directly from the White House.

Modern days hongweibings (Chinese for red guards) are called the Truth Team, and if everything goes as planned, the president will have an army of over two million Americans on his side.


The Obama administration unveiled on Monday a campaign created to crush the GOP competition come November, a mission that they hope to make possible with an army of propaganda- pumped plebeians that will take talking points handed down all the way from the White House. The aim is to influence friends and family with rhetoric being reared as honest-to-goodness truth, and the Obama campaign is calling for Americans to enlist in its coast-to-coast grassroots communications unit that they are calling the Truth Team. They’re an intelligence army being equipped with information right from the White House, and some administration officials are already saying that their troops will be engaged to take on Mitt Romney and whatever other Republicans stand in the president’s way.

"If the other guys are going to run a campaign based on misrepresenting the president's record – and their own — we have two options: sit back and let these lies go unchallenged, or fight back with the truth," deputy Obama campaign manager Stephanie Cutter tells ABC News. "We're fighting back."

With the help of a trio of websites launched to inform and advise the Truth Team intelligence soldiers, the White House wants to enlist millions of young minds that will take cues from Pennsylvania Avenue and attempt to influence cohorts who might not yet be sold on President Obama. The administration is currently trying to corral a youth crew of Obama-backers in the 13 swing states and will them increase their operation elsewhere. By equipping the members with communiqué and creating a hub of intelligence on the World Wide Web, they hope that an army of millions can man a massive social media campaign that will litter every Twitter and Facebook feed in America with facts about the president, as well as truths to counter Republican Party lies created to crush Obama’s run for re-election.

Three years into his term and wielding a wheelbarrow full of unfulfilled promises, that might just not be enough.

On the Truth Team-created website KeepingHisWord.com, the campaign recalls issues that the president has stood by throughout his term so far. They applaud the administration for bailing out the automobile industry, cutting taxes for small businesses and putting Americans back to work. But while the site suggests that Obama was able to boost employment numbers up after nearly three years of catastrophic conditions, it does not acknowledge that this president oversaw one of the longest trends of unemployment in ages. The website reads, “The economy has been growing in the last 23 months under President Obama’s leadership,” yet during a Monday morning address from Annandale, Virginia, the president also described America as only now emerging from the “worst economic crisis in three generations.”

“I wake up every single morning thinking about how can I make sure that anybody who wants a job is able to get a job,” Obama is quoted on the site in a blurb that tries to defend his supposed record of employment creation. On Monday, however, he also said that it’s “a long way to go” before Americans looking for jobs will find them.

Elsewhere, the Truth Team tries to dismantle the plans of the president’s competition."The goal is to ensure that when Republicans attack President Obama's record, grassroots supporters can take ownership of the campaign and share the facts with the undecided voters in their lives," reads an official explanation from the president’s campaign. On one of the Truth Team-sanctioned websites, KeepingGOPHonest.com, the administration attempts to discredit Romney’s campaign by blogging about the Republican frontrunner’s record and how his campaign promises allegedly don’t align with what he tells America. “Romney’s tax plan helps millionaires and hurts the middle class” reads the latest post; “Romney thinks he can fix housing by doing nothing” says another.

Not brought up, of course, are the president’s own lies and broken promises.

There are the promises of comprehensive immigration reform which are three years behind schedule. There are the ongoing operations at the Guantanamo Bay military prison that the president vowed to shut down. And then there’s even the National Defense Authorization Act, which Obama signed two months ago making it possible for Americans to be indefinitely detained and tortured without ever being brought to trial.

But the Truth Team, sadly, most likely won’t be informed of those.

"People don't just want to hear from campaign statements or ads – they want to hear from the family and friends they trust," writes Stephanie Cutter, Obama's deputy campaign manager. And so with the creation of the Truth Team, Obama-friendly facts will be fed to enlistees with the hope that they will go out and spread the message of the president and put Obama in the White House for another four years.

“The president needs folks on board to roll up their sleeves, stand with him and get the truth out all over the country,” Cutter adds in her email. “The next time you hear Mitt Romney accusing the president of ‘crony capitalism’ or someone asking, ‘What has President Obama really accomplished?’ you'll know what to do.”

Cutter suggests that the appropriate response is to direct them to the Truth Team and hope for adding one more recruit to the roster. Just like the hope that the president offered during his last campaign, you might not want to take it for granted.

Will Hunting Got It, Why Don't Most Americans

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I was watching the movie Good Will Hunting this evening and having not seen the movie since it was released I had forgotten about the following scene of the movie. Looking back I am amazed that this scene actually made it into the movie. The two minutes of dialog in this scene speak volumes about US foreign policies.

Are We Seeing The Build Up To World War III?

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article by Craig Hasten

I hope the American people are paying close attention to the what is going on around the globe recently. After 21 years of war in the Middle East it looks like The United States is setting the stage for the next conflict. It was announced yesterday that the CVN 70 Carl Vinson battle group entered the Arabian Sea off the Straits of Hormuz joining the CVN 74 John Stennis battle group which has been in the area for the past two months.

Now riddle me this!


With Obama calling an end to the Iraq, war paired with his recent announcement of defense budget cuts, why such a build up of firepower off the coast of Iran? The answer lies in the fact that Washington knows that Iran has no intention of halting its nuclear program which will give Obama the green light to force an oil embargo on Iran. Iran has already stated many times that if an oil embargo is placed against their country then they will close the Strait of Hormuz. I have no doubt that they will try to close the Strait but with their limited naval capabilities even they know that any such attempt would be futile. The US has made it public that they will not stand for the vital shipping lane to be closed by Iran and would use force to re-open it.

Now here is my question.

Would it really take the firepower of two US carrier battle groups to defeat the Iranian navy and re-open the Strait of Hormuz? One would hardly think so given the size and capabilities of the Iranian navy.

I would like to point out one interesting observation. In August of 1990 the US sent two aircraft carrier battle groups to the Persian Gulf when Iraq invaded Kuwait and their oilfields. The US knew it would be going to war with Iraq and felt like two aircraft carrier battle groups would be the required amount of force (along with the build up of ground troops) that would be needed to complete the job.

Does it appear that history is about to repeat itself?

I don't feel that what is going on with Iran has anything at all to do with their nuclear program, but as always, it's about the control of oil.

This time around I feel that it isn't just going to be the US and a few other tiny allies against a sovereign middle eastern country. This time around it is looking like all the major world players will be showing up for this one. This is starting to have the markings of a good old fashioned World War.

The Romney Con

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As we start to see the race for the White House heat up I find myself wondering what happened to the desire that everyone felt for "Change" three years ago. It quickly became obvious to those that voted for him that Obama had no intentions to delivering his promise of "Hope and Change" that got him elected in 2008. Never before had we seen such support for a candidate that simply promised two things, "Hope and Change".

Sadly, it looks like the American people who cried out for a change from the business as usual politics are being led down the same path again.


Mitt Romney who has broke out in the polls lately is no different than Obama except that he has chosen to hitch his wagon to the Republican party. Romney is nothing more than a wolf in sheep's clothing. The American people need to wake up and see Romney for who he really is, just another politician who is filling his war chest with Wall Street money.

If America is looking for a president who will turn this country around and get us back onto the path of prosperity this is not the man to do the job. All one needs to do is look into his past and see how he destroyed every American company that he took over during his time at Bain Capital. I promise you that Mitt Romney will treat this country no different than he did every company that he took over during his time with Bain. For Romney it is all about the money, greed and power.

Please take a minute to watch this short video to see who the real Mitt Romney is.

Epic Failure: The Supercommittee Was A Super Joke

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article from: The Economic Collapse



Does anyone need any additional evidence that our political system is completely broken?  The bipartisan congressional supercommittee that was given two months to come up with at least $1.2 trillion in deficit cuts over the next decade has failed to reach an agreement.  It is an epic failure and a national embarrassment.  The truth is that they never even came close to an agreement.  In fact, as you will read below, the two sides on the panel have been barely even talking to each other.  In the end, the supercommittee was a super joke.  Meanwhile, the U.S. national debt has passed the 15 trillion dollar mark and we are facing trillion dollar deficits as far as the eye can see.  We are heading directly for a national financial disaster, and our "leaders" seem powerless to do anything about it.


According to the supercommittee's rules, any plan would have had to have been submitted to the Congressional Budget Office by Monday in order to give the CBO 48 hours to analyze how much the plan would reduce budget deficits over the coming decade.

When the supercommittee was announced, it made headlines all over the world, but now it is ending with a whimper.

The supercommittee was never a good idea in the first place, but you would have thought that they could have come up with something over the course of two months.
But instead all they are giving us are a whole bunch of excuses and a whole lot of hot air.

What a joke.

Is it really that difficult to come up with $1.2 trillion in cuts over a decade?

It isn't as if they would even be cutting very deeply.  $1.2 trillion in cuts would not even cut the budget by $150 billion a year.  We would still be talking about trillion dollar deficits way into the future.

But instead of agreeing to some token cuts, they have chosen to do nothing and to blame each other.

So now $1.2 trillion in "automatic budget cuts" will go into effect starting in 2013.  But even that $1.2 trillion figure contains a lot of "fuzzy math".  For example, it includes $169 billion in "projected savings" from "reduced interest costs" on the national debt.

I would love to see how they came up with that figure.

In any event, the truth is that none of these numbers really matter at all.

Why?

None of the budget cuts go into effect until after the 2012 election.  That means that this Congress can vote to repeal the automatic cuts well before then.

Some in Congress are already pushing for this.  For example, U.S. Senator John McCain said the following recently....

"It's something we passed. We can reverse it."

Or, even more likely, once the new president and the new Congress are elected in 2012 they will almost certainly choose to abandon this agreement.

When it comes to politics, the only thing that matters is what happens before the next election.

All of this talk of future cuts is just an illusion.  When the next president and the next Congress come to power, they will want to do their own thing.

So after all of the huffing and puffing over the last couple of years, what has actually been accomplished as far as reducing our horrific budget deficits?

Not much at all.

We racked up a $1.3 trillion budget deficit during the fiscal year that just ended, and this fiscal year we will be somewhere in the same neighborhood.

We have been living in the greatest debt bubble in the history of the world, and at some point all of this is going to end very, very badly.

The total amount of debt in this country (government, business and consumer) has been rising much, much faster than our national income has.  If you don't believe this, just check out this chart.

In particular, government debt is totally out of control.  When Barack Obama first took office, the national debt was 10.6 trillion dollars.

It is now over 15 trillion dollars.

We are in debt up to our eyeballs and we desperately need our leaders to do something about it.

But according to a recent Politico article, the members of the supercommittee haven't even been talking to each other....

The supercommittee last met Nov. 1 – three weeks ago! It was a public hearing featuring a history lesson, “Overview of Previous Debt Proposals,” with Alan Simpson, Erskine Bowles, Pete Domenici and Alice Rivlin. The last PRIVATE meeting was Oct. 26. You might as well stop reading right there: The 12 members (6 House, 6 Senate; 6 R, 6 D) were never going to strike a bargain, grand or otherwise, if they weren’t talking to each other. Yes, we get that real deal-making occurs in small groups. But there never WAS a functioning supercommittee: There was Republican posturing and Democratic posturing, with some side conversations across the aisle.

Can you believe that?

Could it really be true that they have not met since November 1st?

Is Congress really that much of a joke?

According to Real Clear Politics, the approval rating for Congress is sitting at about 12 percent right now.

After this, it may get even lower.

Instead of working on a solution to our problems, the members of the supercommittee have been busy going on television and telling us who to blame.

The following is a short exceprt from a recent article in the Washington Post....

Republicans on the supercommittee held a conference call Saturday morning, and aides said members from both parties continued to talk by phone. But neither side was predicting a last-minute breakthrough. Instead, seven panel members booked appearances on the Sunday talk shows, as both sides readied their best arguments for why the other is at fault.

Our politicians are obsessed with finding someone else to blame and with getting ready for the next election.

Meanwhile, the ship is going down and people are starting to panic.

And this is not going to look good to the rest of the world at all.  There is a very real risk that one of the other major credit rating agencies will decide to downgrade U.S. debt.

The second downgrade of debt is often more important than the first.  When the first downgrade happened, U.S. debt still had a AAA rating from the other two major credit rating agencies.

But after another downgrade, the average credit rating of U.S. debt will be less than AAA.  That will mean that U.S. debt will no longer be a cash proxy.  A lot of transactions that take place right now in the financial world would not be able to happen if that takes place.

So what do our leaders need to do?

Well, the truth is that we should recognize that they are in a really, really tough position.  Decades of nightmarish decisions have left us out of good options under our current financial system.

The reality is that members of Congress are damned if they do and they are damned if they don't.

This is what I mean - if we don't deal with our national debt now, everyone agrees that a massive day of reckoning is coming down the road.  Greece is an example of what happens when debt catches up with a nation.

However, if we did cut the federal budget very deeply right now, it would almost certainly bring on a huge economic contraction.

Right now, insane federal spending is one of the only things keeping this economy afloat.  If you were to suddenly pull half a trillion dollars (or more) of federal spending out of the economy, it would have a devastating impact.

A lot of people out there correctly argue for a huge reduction in federal spending, but they greatly underestimate the amount of pain that it would cause.

Let there be no doubt, all of this federal debt has enabled us to enjoy a "false prosperity" for several decades, and when we dramatically cut back on spending a lot of that "false prosperity" is going to disappear.

Our "real economy" is rapidly being gutted and America is becoming poorer as a nation every single day.  One way that we have been making up the difference is by going into almost unbelievable amounts of government debt.  When the government debt bubble pops, the pain is going to be enormous.

If you do not believe this right now, you will believe it soon enough.

Not that we should keep going into huge amounts of debt.

Every dollar that we "borrow" is actually being stolen from our children and our grandchildren.

In fact, that is what Thomas Jefferson believed.  According to Jefferson, when the federal government borrows money in one generation which must be paid back by future generations it is equivalent to stealing....

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

We have got to stop stealing from future generations.  If they get the chance, they will curse us for what we have done to them.

Anyone out there that supports our current system of running endless budget deficits is supporting a horrific crime against our children and our grandchildren.

But once again, we all need to clearly understand that when the borrowed money stops flowing out of Washington D.C., our economy is going to get much worse.

Are you prepared for the unemployment rate to double?

Are you prepared for foreclosures to soar to unprecedented heights?

Are you prepared for economic pain unlike anything you have ever seen before?

According to the New York Times, there are 100 million Americans that are either living in poverty or that are considered to be among the "near poor" right now.

So how bad will things get if we plunge into a depression?

Anyone that believes that we can drastically cut the federal budget and improve the economy at the same time under our current system is not being rational.

Just look at what is happening to Greece.  They implemented substantial budget cuts (although not nearly big enough to bring them to a balanced budget) and they have plunged into a nightmarish economic depression.

Right now, we are in a position where we are going to experience a horrific amount of pain whatever we do.  If we keep piling up debt at this rate we will experience a nightmare, but if we pop the debt bubble and try to live within our means we will also experience a nightmare.

There is a way out of this, but our politicians are not talking about it.  As I have written about previously, if the federal government abolishes the Federal Reserve and starts issuing debt-free money, we could eliminate our federal budget deficits, cut taxes and improve the economy all at the same time.

But nobody is even talking about debt-free money.

Instead, all of our politicians are talking about "fixing" the current system.

Well, let me tell you, it is impossible to solve our problems under the current system.  If we insist on maintaining our current debt-based financial system, it will only end in a massive amount of pain.

The American people need to get educated about our financial system.  They need to learn that the Federal Reserve and the debt-based currency that they issue are at the very heart of our economic problems.

Back in 1913, prior to the passage of the Federal Reserve Act, the national debt was only about $2.9 billion.

Today, our national debt is over 5000 times larger.

Debt-based central banking is a perpetual debt machine.  It is at the heart of our financial problems and it is also at the heart of the financial problems that Europe is experiencing.

Unfortunately, the American people don't understand this, and there are virtually no politicians out there that are even talking about this.

Very dark days are ahead for America.

You had better get prepared.

I AM NOT MOVING - Short Film - Occupy Wall Street

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Incredible Speech By Wall Street Protester "End The Fed" 2011

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In all the media coverage I have viewed over the course of the past few weeks I failed to hear anyone who put forth a compelling argument as to what they were protesting against. Then I saw this young man and I was truly blown away. Here is a young man who truly understands what is going on in this country and gives one of the best speeches I have heard in a long time.

Obama Goes All Out For Dirty Banker Deal

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by Matt Taibbi / Rolling Stone


On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.

On the other side is the Obama administration, the banks, and all the other state attorneys general.

This second camp has cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.

The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.


This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline. 

The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.

So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.

In addition to the global settlement, Schneiderman is also blocking an individual $8.5 billion settlement for Countrywide investors. He has sued to stop that deal, claiming it could “compromise investors’ claims in exchange for a payment representing a fraction of the losses.”

If Schneiderman thinks $8.5 billion is an insufficient, fractional payoff just for defrauded Countrywide investors, then you can imagine how bad a $20 billion settlement for the entire industry would be for the victims.

In that particular Countrywide settlement deal, it looks like Bank of New York Mellon, the New York Fed, Pimco and other players negotiated on behalf of defrauded investors. They told the Times they were happy with the deal, but investors outside the talks told Gretchen they weren’t happy with the settlement. 

Schneiderman apparently listened to those voices instead of the Mellon-Fed-BofA crowd, which infuriated the insiders who struck the actual deal. In a remarkable quote given to the Times, Kathryn Wylde, the Fed board member who ostensibly represents the public, said the following about Schneiderman:

It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.

This, again, is coming not from a Bank of America attorney, but from the person on the Fed board who is supposedly representing the public!

This quote leads one to wonder just what Wylde would consider “indefensible,” given that stealing is pretty much the worst thing that a bank can do — and these banks just finished the longest and most orgiastic campaign of stealing in the history of money. Is Wylde waiting for Goldman and Citi to blow up a skyscraper? Dump dioxin into an orphanage? It’s really an incredible quote.

The banks are going to claim that all they’re guilty of is bad paperwork. But while the banks are indeed being investigated for "paperwork" offenses like mass tax evasion (by failing to pay fees associated with mortgage registrations and deed transfers) and mass perjury (a la the “robo-signing” practices), their real crime, the one Schneiderman is interested in, is even more serious.

The issue goes beyond fraudulent paperwork to an intentional, far-reaching theft scheme designed to take junk subprime loans and disguise them as AAA-rated investments. The banks lent money to corrupt companies like Countrywide, who made masses of bad loans and immediately sold them back to the banks.

The banks in turn hid the crappiness of these loans via certain poorly-understood nuances in the securitization process – this is almost certainly where Scheniderman’s investigators are doing their digging – before hawking the resultant securities as AAA-rated gold to fools in places like the Florida state pension fund.

They did this for years, systematically, working hand in hand in a wink-nudge arrangement with clearly criminal enterprises like Countrywide and New Century. The victims were millions of investors worldwide (like the pensioners who saw their funds drop in value) and hundreds of thousands of individual homeowners, who were often sold trick loans and hustled into foreclosure when unexpected rate hikes kicked in.

In a larger sense, even the (often irresponsible) people who simply bought more house than they could afford were victims of this scam. That's because in many of these cases, credit simply would not have been available to those people had the banks not first discovered a way to raise vast sums of money dumping crap loans on an unsuspecting market.

In other words: if Bank of America hadn’t found a way to sell worthless subprime loans as AAA paper to the Chinese and the Scandavians in May, you can be sure that it wouldn’t be going back to Countrywide in June to lend out more money for more subprime loans.

And Countrywide, in turn, wouldn’t then have been sending masses of reps out into the ghettoes to offer juicy home loans to undocumented immigrants and refis to confused old ladies on social security.

This is as bad as white-collar crime gets. But to Wylde, it doesn’t rise to the level of being “indefensible.” Until they do something worse than this, we apparently should support the banks, and make sure they don’t have to pay more than a fraction of what they made off of this kind of crime.

What is most amazing about Wylde’s quote is the clear implication that even a law enforcement official like Schneiderman should view it as his job to “do everything we can to support” Wall Street. That would be astonishing interpretation of what a prosecutor's duties are, were it not for the fact that 49 other Attorneys General apparently agree with her.

In Schneiderman we have at least one honest investigator who doesn’t agree, which is to his great credit. But everyone else is on Wylde’s side now. The Times story claims that HUD Secretary Shaun Donovan and various Justice Department officials have been leaning on the New York AG to cave, which tells you that reining in this last rogue cop is now an urgent priority for Barack Obama.

Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.

Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.

‘Before NATO intrusion, Libya was African Switzerland’

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Jon Stewart Wants To Know: Why Is The Media Ignoring Ron Paul?

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Over the weekend Dr. Ron Paul placed second in the Iowa Ames Straw Poll by a narrow margin of 200 votes behind Michelle Bachmann. One would have thought that the canidate who came in second in the Straw Poll would have received some serious media attention right?

Wrong!

As Jon Stewart points out in this clip from his show "The Daily Show", there seems to be a complete media blackout on Dr. Ron Paul. Furthermore I find it troublesome how the clip shows how every news outlet is on board with blackballing Dr. Ron Paul.

Bank of America's Back-Door TARP!

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Taxpayer-owned Fannie Mae just bought the servicing rights to a bunch of bad loans from the struggling Bank of America. Where does it end?

By Abigail Field

FORTUNE -- Taxpayers may not realize it, but they just bailed out Bank of America again, this time to the tune of more than a half billion dollars.

The Charlotte, NC-based bank was one of the biggest recipients of bailout funds during the financial crisis. But Bank of America (BAC) continues to face deep problems related to its troubled mortgage portfolio and investors have battered the stock, which has plunged over 40% so far this year. That's escalated concerns that the bank may need to raise more capital. Yves Smith at Naked Capitalism has even started a BofA death watch.


But apparently the federal government is determined to resurrect BofA: the Wall Street Journal reports the feds have just used Fannie Mae, which is controlled by the U.S. government, to infuse BofA with $500 million and ease one of the bank's biggest headaches.

Yesterday afternoon on CNBC, Bank of America CEO Brian Moynihan mentioned that five of BofA's six businesses were making money. The one black spot was its massive portfolio of problematic mortgages and the liabilities flowing from it. Moynihan also mentioned that BofA had just sold some "mortgage servicing rights" as part of its balance sheet strengthening efforts, but he didn't elaborate.

According to the WSJ, Fannie Mae spent $500 million to buy the servicing rights to a big chunk of the "seven million loans still causing the most problems." Although the $500 million is a paper loss to BofA, in that the rights were "originally worth more," it looks like BofA is still getting a good deal because the portfolio's "value is expected to deteriorate further."

In fact, the deal is worth much more than $500 million to BofA, because getting rid of those servicing rights lifts a huge cost burden off BofA's shoulders. And if securitized loans are involved, which they most likely are, the sale also limits the BofA's potential liability to investors for its current servicing violations. Finally, the $500 million is surely more than the servicing rights are worth in an arms-length transaction. How do we know? Beyond the comment that the loans are expected to "deteriorate further," the goal of the intervention can only be to fix Bank of America's capital structure, which is easier for the government to do if it overpays for the rights.

In short, purchasing these servicing rights was another Troubled Asset Relief Program.

Servicing defaulted loans can be good business if cheaply produced foreclosure paperwork isn't questioned, and if the foreclosures have equity and can be resold easily with lots of junk fees. But the mortgage servicing rights Fannie Mae bought are stinkers: they have a 13% delinquency rate, which means lots of foreclosures and loan modifications.

Both foreclosures and mods have been big headaches for BofA, which faces potential liability for document fraud in its foreclosures on multiple fronts. Beyond that, foreclosures are simply expensive to do well. BofA was recently punished by Treasury for failing to do modifications well, and it's also been sued for how it does them.

But the loans Fannie Mae bought are even worse than 13% delinquency rate suggests. According to the WSJ, "more than half of the loans are in troubled U.S. real-estate markets." This likely means markets where a high percentage of the houses are underwater and there's a huge oversupply, driving prices down further and making defaults more likely.

Fannie Mae is purchasing "the servicing rights in order to transfer the day-to-day management of those loans to a different company." That's another huge sign that Fannie Mae is overpaying. If the rights were really worth $500 million, wouldn't a private company pay that for them? Instead, it sounds like Fannie Mae is doing a bailout two-step, one to BofA and one to whomever takes these rights off Fannie Mae's hands.
Another thing needs to become clear: where did Fannie Mae get the money to do BofA the favor of buying these rights? Fannie Mae just asked for another bailout of its own, seeking a new $5.1 billion infusion last week.

Think about how good this deal is for BofA: it gets to stop the bleeding, or at least cauterize much of the wound in its balance sheet that lousy mortgage servicing rights and mortgage securities liabilities are creating. And it gets half a billion dollars to boot.

And taxpayers? Well, we get to own yet another good chunk of BofA's mess.