This is an ENORMOUS deal. Schneiderman is looking at the failure to properly convey notes and mortgages to the securitization trusts, which court records clearly show was practically the industry standard during the housing bubble. Abigail Field’s work looking at just a handful of mortgages in one district court showed a perfect record of failure. These trusts were strictly time limited under New York law, and there’s no way for the banks to really make this right. By the way, the mortgages Field looked at had Countrywide as the originator. Countrywide is now part of Bank of America.
If this plays out as it could, Schneiderman could declare these securities invalid under New York trust law. There would be a lawsuit in response, of course, but the exposure of Bank of America for this claim is massive, potentially bigger than their capital reserves. Pretty much every investor in a BofA MBS would demand their money back on the faulty security. Not to mention the inability to foreclose on borrowers because of the lack of proof of ownership of the loan. We’re talking about trillions of dollars in losses on millions of loans with no true owner. It’s a nightmare scenario for the banks.
Obviously Schneiderman is just at the beginning of his probe. But at the least, this scrutiny of the loan documents shows that he’s completely not ready to join a 50-state settlement where he gives up his investigation in exchange for some nominal, piddling sum of money. That does not match his recent history and his ongoing investigations.
UPDATE: Gretchen Morgenson reports that Schneiderman and Delaware AG Beau Biden (the VP’s son) are investigating securitization fail at Bank of New York Mellon and Deutsche Bank. These were two of the bigger trustees, who had the responsibility of properly packaging mortgage backed securities.
NEW YORK (Reuters) – New Jersey Governor Chris Christie announced a pilot program on Thursday that would allow private companies to run public schools in some of the state’s chronically underperforming school districts.
The public-private partnership would authorize school management organizations to operate five schools, and would target some of the 100,000 New Jersey students now enrolled in 200 chronically failing schools, the governor’s office said.
The state’s teachers union, which has clashed with the Republican governor over cuts to school aid and other issues, said the plan was part of Christie’s “ongoing effort to privatize public education in New Jersey.”
[...] Christie has appointed as his acting education commissioner Christopher Cerf, the former president of Edison Schools Inc., the country’s largest private-sector manager of public schools. The company is now called EdisonLearning.
Billionaire Rupert Murdoch owns Fox News, which promotes both a “corporate education reform” agenda and politicians like Governor Chris Christie to carry that agenda out. Murdoch recently hired Joel Klein, former NYC Schools Chancellor and toady to billionaire Mayor Michael Bloomberg, to run Wireless Generation, Murdoch’s venture into the education business.
Klein is the former boss of Christopher Cerf, currently Acting Commissioner of Education under Chris Christie. Cerf’s last edu-business venture before accepting the position was as founder of Global Education Advisors, which “consulted” with the Newark schools on a plan to vastly increase the numbers of charter schools in the city.
The $500,000 for the report came from the Broad Foundation, funded by billionaire Eli Broad. The foundation also funded Cerf’s training as an education administrator.
June 12 (NHK) – The operator of the Fukushima Daiichi nuclear power plant has been forced to reconsider its plan to cool the spent fuel storage pool of the No. 4 reactor.
Water injection from a special vehicle has not been intense enough to cool the water in the pool, allowing the temperature to remain at more than 80 degrees Celsius.
Tokyo Electric Power Company, or TEPCO, aims to install a circulatory cooling system that will pump water out of the pool and return it there as coolant. The utility originally hoped to put the system in place next month.
On Friday, workers entered the 4th floor of the No. 4 reactor building where the pool is located for the first time since the nuclear disaster took place.
They found a large hole in a wall created by the March 15th explosion. They also discovered that a nearby pipe necessary for the cooling system had been mangled.
TEPCO says the repair team found it hard to work near the pool as equipment had been destroyed and debris was scattered on the floor.
Fixing the damaged pipe is expected to be extremely difficult. In addition, it remains unclear if there is another pipe that can be used for the cooling system.