Foreclosure-Gate: Yves Smith Nails It Again

12-03-2010 • Market-ticker.org & NakedCapitalism

Read: "If you actually do something about this, the economy will collapse." Where have we heard that before? We are left to speculate - to some degree - on why, suddenly, those transfers stopped taking place. There are those who argue that they never really were necessary and that there was no legal or other import to them not happening. I, of course, disagree, as to many other scholars, including legal scholars. I am always more interested, however, in the motivation for an act rather than the act itself, because when one starts looking toward motive one usually finds out not only what happened but also why it happened, and once you discover that, you usually find out about more things that happened to further whatever the original motive was. I think it's quite simple - you can't audit what you don't have. And when you read PSAs, you find that every one of them contains some sort of representation as to the quality of the loans taken in. This isn't a bald assertion - there's an actual fiduciary duty, enforceable under the law, that these assertions which are made are not made with reckless disregard for the truth. But we have reason to believe that they were, as Clayton's testimony demonstrates. Once you look there and start to think on it a bit, the reason for all of this "head in sand" nonsense makes sense. Again I return to the basics: You can't audit what you don't have. I'm with Yves on this one, along with Professor Levitin. And I find the "tanks in the streets" threat from Deutsche outrageous. Again I ask: If there in fact are perfected endorsements that comply with the PSAs, why can't someone produce one and why do we keep finding them "not able to be produced" the bankruptcy judges demand to see them?