An interesting piece came out about the calamity befalling Citigroup the other day in Wall Street On Parade. It discussed two major issues in the banking sector which are currently being mirrored in our Industry. One deals with the crash in valuation and the other deals with illiquidity in our Industry. I do not usually quote large swaths of other publications because, generally, they have an angle. WSOP hit the nail on the head,
On the first day of trading in January 2007 (the year prior to the Wall Street financial crisis in 2008 that saw century-old iconic financial firms explode one after another), Citigroup closed the trading day at $55.25. Last week, Citigroup’s common stock closed at an effective share price of $4.20.
WSOP goes on, though, to lay out some armageddon type of scenarios which are even more troubling than the crash in Citigroup’s stock. The amount of uninsured deposits at Citigroup is off the charts.
Citibank indicates in its call report for June 30 that 85.5 percent of its $1.338 trillion in total deposits are uninsured.
Overall, though, it gets even worse,
According to federal banking reports filed with regulators for the quarter ending June 30 (call reports), the four largest U.S. banks by assets (JPMorgan Chase Bank, Bank of America, Citibank and Wells Fargo) accounted for $4.185 trillion of uninsured deposits, or 59 percent of all uninsured deposits at all 4,645 federally-insured institutions. The breakdown for the other three mega banks as of June 30 are as follows: 59 percent of JPMorgan Chase’s deposits lack FDIC insurance; 49 percent at Bank of America; and 51 percent at Wells Fargo.
If you look at what happened this past summer, two of the three largest bank collapses in US history happened. And they happened in a matter of only hours if you look at the real time tallies — Silvergate, Signature Bank, First Republic Bank, and Silicon Valley Bank. The troubling thing is that the very same thing is happening within our Industry. It is kept out of the headlines for several reasons. First, there is no NAICS to track our Industry, outright. And second, many larger firms step in to scoop up the outstanding contracts while threatening the very same Labor whom were butchered if they open their mouths about the losses. This, in turn, creates an atmosphere wherein no legal bankruptcy has to be filed and the very same serial recidivists are let go, scott free.
And when it comes to losses and the price fixing that keeps the status quo going, this Industry is a sterling example of a cartel. Mortgagee Letter pricing, Fannie Mae pricing, Freddie Mac pricing — all written in stone. Bids are not allowed to exceed what the Industry determines them to be with mandatory percentage of gross kickbacks to the Prime Vendors and the middlemen and women up and down the pike. And a centralized organization overseeing it all.
In the case of Assero — technically known as Assero24 as they are owned by HUD M&M FSM 3.12 Awardee 24 Asset Management — the collapse was known long before it ever began. In fact, the very same people whom allowed Lee Mertins to hone his Art of Fraud while safely ensconced at Asset Management Specialists (AMS) have been keeping a dutiful eye over Mertins. It is incontrovertible, as Mertins began ripping through what became the competition of Guardian Asset Management and other firms like Brookstone Management, both beneficiaries of the Assero collapse, Labor was Deep Sixed in a profit strategy. The reality is no one did a thing to protect Labor. The record is quite clear, actually. Here, let me walk you through it in the way that only a trained media professional such as myself is capable of doing,
When the disassembly of AMS began, everyone knew they would get a piece of the pie and it simply became what political stripes and sexual orientation would they reassemble under. And you know what? Normally, I wouldn’t give a damn. The problem with this latest orchestrated collapse is the sheer amount of terror and financial damage these people have caused. Were they united in causing it? I don’t know. What I DO KNOW is that through each and every variation of Buczek Enterprises, National Field Network, SEAS, Primestar, and now Assero, Guardian Asset Management has been there to make a killing and prevent all but National Field Network from having to file bankruptcy. I am not saying Guardian set out to plot the course with Mertins, but I am saying that they could have prevented over a decade of misery for Labor and refused to come to the table to do it.
We are falling back into what Foreclosurepedia worked so hard to fix after the 2008 Financial Crisis, when it came to fraud in this Industry. Here is what kicked me over the top, though, when it came to Assero’s collapse and the scooping up of the contracts, while hanging Labor out to dry,
Assero debt load: 1 vendor in AR – $60K; 5 vendors in PA – $70K, $50K, $8K, $6K, and $2K; WV 2 vendors – $37K and $12K; and NY 1 vendor – $50K.
And while NFN’s Involuntary Bankruptcy, which we orchestrated, was substantially more by millions of dollars, Labor has had their lives destroyed going into the holiday season. Right place, right time? I don’t know. What I do know is that while the Merry Band of Fraudsters all licked their chops and picked the bones of Labor clean, the cutting of Labor’s work with Ocwen, et al., while SFR accounts have now all been isolated for cherry picking, it creates a sense of déjà vu. I am not one to believe in coincidence and I have stomached enough. Here is what the Assero collapse means to one family,
I feel bad for him. Just a nice person, [a] minister [with] 9 kids. And too trusting. His son had been busting his ass all summer to make enough money to get an engagement ring for his girl. And the holidays now coming up. $37k can ruin him. Just sucks. May not be a lot of money to some people but could be life and death to others.
One common company and one common theme — much like an Angel of Death in the ER or at a nursing home. You cannot simply create a monster and then unleash it on Labor without picking up the pieces. I say this because there was a proverbial off switch for Assero that no one wanted to use. Mertins’ former colleagues could have shut him down, long ago. That would have meant honesty and real discussions with entities like HUD initially, and TDR Capital later, though. They didn’t do it because the massive amount of clean up was a profit to high to turn their backs on. It wasn’t like they didn’t know Mertins’ modus operandi. More on point, though, my opinion is that the gamble was made to allow Labor to take the shots to the gut in order to swoop in and pick up the scraps. Remember, this is the 5th time now — this is the quintessential definition of serial recidivism. It is the legal definition of deliberate indifference. The comical thing is that I had telegraphed publicly and privately that I was ready to move on into education and organization. I was ready to make an honest go of it and create change in a meaningful way and not by the linear inch. It reminds me of the call I had with Eric Miller, Executive Director of NAMFS, a decade ago, come December. That call proved to be prescient in that all I asked for was a Committee to study the chargeback problem. I was told it would never happen. I responded by saying I would bankrupt NAMFS and its Membership. Reflecting back, I think that firms like Berghorst Enterprises and a handful of lawyers like NFN’s Deutsch wished Miller would have been a bit more forthcoming in his bravado. Matter of fact, start with Exhibit A in the below document,
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You do not switch up the playbook in mid-stroke and bring in new management offering nothing other than platitudes. And you certainly do not spin webs of deceit attempting to stay off the record because you think it will give you a better attack. Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate. Sun Tzu there, if you were curious.
I appreciate the advice from many of you, this past week. And the drying out process of getting off the Scotch has brought one major thing into focus again, which is that Management has never had an interest in supporting Labor. When you peg the production of Vendor Managers to bonuses, bonuses which cut out of Labor’s profit, then you have an institutional problem.
The reality is that peace treaties simply do not work in this Industry. I always have and always will be a Friend of Labor. The overarching reality is that kindness is mistaken for weakness. More on point, though, the Industry has forgotten about who actually does the work. As Management splits up the money from internally busted up operations and deploys their own W2 personnel to clean up the mess, they also forgot about the fact that the remaining personnel in the field are misclassified employees. The millions of dollars already paid out in settlements by firms like Mortgage Contracting Services, Sandcastle, and ServiceLink were based upon a time before these firms were doing the same work as Labor does now. In light of how California, Ohio, New Jersey, New York, and Rhode Island are criminalizing wage theft today, I think that 11/11 will be another a ha moment on the calendar for the Industry. The simple transition into a contractually based education and organizing setting; the paying of Labor and offering them opportunities, would have been far less expensive than counting the Benjamins behind secret email addresses.
What could have been a very simple transition has now become a lightning rod. I am grateful for the wake up call to sober up. I am grateful in that I am not caught up in SOX Act violations. I am also grateful that like a beacon of light, shining in through the wilderness, I will continue being a Friend of Labor. And beginning in December, the IAFST Federation of Labor is going to come out swinging. And for those of you who wondered where the old Foreclosurepedia was, well sobering up helps hone the skillsets necessary to topple the Old Guard.
