Following a rough and tumble year in the banking industry, Belial Bank’s feckless fearless leader, B.L. Zebub, believes it is high time to bring some levity and loyalty to the lowly troops who have been tirelessly foreclosing all the Beleaguered Borrowers they may have missed the first and second time around. Mostly, however, B.L. is concerned about the reputational damage his bank has suffered this year. Once known as the largest bank in America as measured by hubris, it is at risk of losing this mantle of distinction. On the Chinese calendar, 2012 has been Belial Bank’s Year of the Rat.
B.L. is hoping against hope to instill a sense of pride among the rank and file; he knows that his company’s promise to the feds to install a “single point of contact” [or “SPOC”] for every borrower seeking help, has become a sham. Problem is, after a couple of weeks on the job, the SPOCs either quit, get fired, or leave to take more respectable jobs in the collection and repo industries. And then there was the public relations nightmare Belial Bank suffered after it was disclosed to the press that the top brass were giving prizes to supervisors who could run up the highest number of SPOCs for a single borrower in the shortest amount of time. Last week’s big winner, Art O. DeLay, won a hundred crisp dollar bills and the afternoon off to visit The Devil’s Den Gentlemen’s Club, conveniently located just down the street from Belial’s headquarters. [Cover charge waived.]
So, in a hastily convened meeting, B.L. met with his trusted advisors and cohorts to discuss a theme for the Bank’s upcoming holiday party. Participants include the Bank’s legal intern, Les Guile, who has developed over the year a razor sharp tongue, much to the delight of B.L.; chief handwringer, Liz Pendens of the title industry is in attendance; Dee Faulting, the Ma Barker of the lender servicing industry, and Kenneth Y. Slick III [“KY” to his friends], who believes he has the looks and brains of Jamie Dimon, but actually resembles Falstaff in a wrinkled Brooks Brothers suit.
B.L.’s loyal secretary, Lucy Furr, a frumpy version of Della Street, has dutifully transcribed this conversation. In a blood oath to Julian Assange [who is still hiding out in the Ecuadorian Embassy], I regret I cannot disclose how this purloined post fell into my hands. – PCQ
B.L. Zebub: “Welcome everyone! ‘Tis the Season’ – sort of. I trust you all have a copy of the agenda Lucy sent out. I don’t believe I have to explain the seriousness of today’s meeting. With the holiday season upon us, and the annual party looming, we have to figure out a way to bolster the esprit de corps of our personnel. Rumor has it that the folks in our loan modification department are becoming bored, and have started answering borrower calls using phony names like Les Hope, May B. Knott, and [my personal favorite] Jokson Yu. I gotta admit, I have to laugh when I hear some of these names, but if the press picked this up, our P.R. ratings would make Charles Manson look like a saint. You remember what happened with that Devil’s Den fiasco. We can’t be seen mixing business with pleasure.”
Liz Pendens: “B.L. I’ve about had it up to here with the lending and servicing industry. I thought 2008 was bad after Bear Stearns imploded and Lehman Bros. went bankrupt, but 2012 was an all-time low. Virtually every big lender, servicer, and investment house in the world has become a charter member in the Rogue’s Gallery of Banksters. Barclays got caught manipulating LIBOR; HSBC got caught laundering money for terrorist countries and drug dealers; JP Morgan got caught making huge side bets on derivatives; Wells Fargo got caught putting force-placed insurance on distressed homes and reaping huge side profits through kickbacks; Citibank got caught knowingly selling toxic loans to the FHA; Goldman Sachs is still suffering the reputational fallout for selling its investors packaged securities that it publically touted as “investment grade,” while it was secretly betting billions they would fail – which they did. Bank of America is constantly in the financial news – every time you turn around they’re paying a billion here, a billion there, for the rapacious loans made by its bastard adopted child, Countrywide. Ken Lewis got out in the nick of time. I could go on, but….”
Dee Faulting: “And your point is? Liz, banking is not for the faint of heart. It’s a high risk, zero sum game. For every winner there’s a loser. You folks in the title industry don’t understand that. You take little or no risk and charge huge premiums for pretending to provide “insurance” coverage when you actually exclude on the title policies anything with a whiff of risk. You have a lot of nerve today. You were on board when we created MERS – you reaped the profits from that little sham, and even publicly touted it as a great idea. Every time our industry made a home loan and ordered title insurance, you got your 30 pieces of silver; and yet you stood quietly by, while the banking and servicing industries fell on their swords for the excesses of 2004 – 2007. Your industry was an unindicted co-conspirator in all of this, but you never got pilloried in the press like we did. So from where I sit, you don’t have a lot of room to complain today.”
Les Guile: “Wow. Pot meet kettle! Liz, I gotta say, Dee’s right. It was a Faustian bargain that you made; you knew what you were getting and knew where you were going for doing so.”
B.L. Zebub: “Les, I like that metaphor! Mephistopheles is my favorite character in literature; refined, suave, urbane, witty, all with a hint of wickedness – reminds me a bit of myself. I never liked the images of me created by Dante and Milton. But, I digress…. We’ve got a lot on our agenda, so we have to stay on track. First, let’s figure out a theme for the Holiday Party. And I don’t want to hear anyone call it a ‘Christmas Party.’ The will be a ‘Holiday Tree’ – not a ‘Christmas Tree.” I agree with that Rhode Island Grinch Governor, let’s strike the word ‘Christmas’ from the holiday lexicon. The only reason Belial Bank is putting this function on is to divert the attention of our worker bees away from the business of kicking people out of their homes. We’ll have plenty of Devil’s Springs Vodka flowing. At 160% proof, it won’t take long for them to loosen up. I always know when that happens, because they forget the sheer boredom of ‘pretending’ to help the Little Guy seeking a loan mod, and start bragging about how many folks they kicked out of their homes. Last year, we even had some of them hire a limo to drive around to show their spouses and SOs every home they’d foreclosed. They called it the ‘Street of Broken Dreams Tour.’ It was a real hit and did wonders for employee morale.”
K.Y. Slick: “B.L., I remember that! It was fun until we accidentally pulled up to a home the limo driver had just lost in one of our foreclosures. I thought he was going to drive us into the river. We calmed him down, but it kinda put a damper on the rest of the evening. Anyway, I do have a suggested theme for the Holiday Party. In fact, I think we should use the theme in a public relations blitz.”
B.L. Zebub: “Well don’t keep us waiting, K.Y., let us in or your idea. I bet its some devilish scheme packaged up to look good for the consumer.”
K.Y. Slick: “Well, you’re not far off B.L. I say we stop all of our foreclosures and evictions in December. Paint it as something good we’re doing because deep down, we have a collective corporate conscience. We’ll call it “Home for the Holidays.” It will be designed to permit homeowners to spend one last Christmas holiday at their home. Everything gets put on hold for 30 days, while we reap the benefit of the good press – for once.”
B.L. Zebub: “I get it! While the public thinks we’re doing it for The Little Guy, we’re really making extra money by the delay. For all the bad loans we’re servicing, we continue to pile on late fees, kickbacks for force-placed insurance, and all the other extra servicing fees we charge when a loan is not performing. And since these loans don’t tip over in the Abyss for another 30 days, we don’t have to recognize the accounting loss in December. K.Y., I take back all the mean things I ever said about you – even the ones I just thought about saying, but didn’t.”
Les Guile: “Hmmm. I admit this little scheme may sound attractive, but there may be some folks out there, like that irascible Phil Querin, who might paint a more cynical picture of what you’re doing. First, he might see it for what it is, i.e. a public relations stunt, and second, he would say that no way is this in the best interest of Beleaguered Borrowers. First, as we know, the Mortgage Debt Relief Act of 2007 is expiring on December 31, 2012. Although it should be extended, and probably will be, right now no one is sure. Congress is suffering a chronic case of ADHD, and can’t focus on more than one thing at a time. Right now it’s the Fiscal Cliff. From where I sit, I’d rather be foreclosed in 2012 than wait. If the law is not extended, it could mean homeowners might have to pay income taxes on the forgiven debt when their foreclosures are completed in 2013. In other words, I wouldn’t look at K.Y.’s “Home for the Holidays” scheme as a real bargain. Besides, a lot of distressed borrowers have already moved out of their homes, primarily because they grew tired and frustrated with how slow Belial Bank’s faux modification process was taking. Do you really think they’re going to move back to The House of Bad Memories just for ‘old times’ sake?”
K.Y. Slick: “I assumed you’d find some objection Guile. For someone with so little experience, you seem to have an opinion on almost everything.”
Les Guile: “I’m sorry you feel that way, K.Y. As for experience, I’ll admit I can’t compete with you. But I do have a memory of what’s happened over the last five years. Your industry went on a lending spree with loose or nonexistent underwriting; then you sold these toxic loans [with the complicity of the ratings agencies] to unsuspecting investors and pension funds. Then, when your off-balance sheet accounting tricks caught up with you, you held out your tin cup to the American Taxpayers, asking for billions of dollars of TARP funds. And despite all this, your industry has the temerity to blame the foreclosure crisis on the “moral hazard” of borrowers, saying they acted irresponsibly because they had no skin in the game with 100% loans. Just remember, you created these lending programs, and promoted them to folks you know full well couldn’t qualify and would likely default. Then you sold the loans to investors, and in some cases, like Goldman Sachs, even placed billion dollar bets the loans would fail. And if it wasn’t enough to get paid for making these toxic loans, you made sure you’d get paid to service them for the investors you scammed; and you also got paid to foreclose them. You set up subsidiary companies, like ReconTrust, whose sole purpose is to foreclose the loans Bank of America services. You created captive title insurance companies to profit on the loans you made and the foreclosures you filed. And when you listed your REO properties with real estate agents, you demanded they kickback a share of their commission – which in some states, like Oregon, is illegal. Of course that hasn’t stopped you from doing so. You even found a way to indirectly collect the equivalent of attorney fees for the foreclosures your selected law firms conducted. Yours is a cradle-to-grave business model, birthing bad loans, servicing them, hospitalizing them, and burying them. I didn’t need to go to school to learn this. Reading the financial pages and talking to everyday people was enough. Need I go on K.Y.?”
B.L. Zebub: “Wow! Our young intern certainly seems to have his own opinion about the lending and servicing industry. I suggest we suspend this little tête-à-tête before K.Y. climbs over the table and throttles Les. Let’s address how we’re going to pay for the Holiday Party. We’re on a pretty tight budget this year. It look were going to have to beef up our capital reserves, thanks to Basel III. Dee, you’re pretty clever about these things. Do you have any schemes ideas how we might fund this little event without having to pay for it from our own funds?”
Dee Faulting: “Funny you asked, B.L. I actually do. And it involves K.Y., of all people. We need someone of the portly sort – sorry K.Y. – I know you think you’re prettier than Jamie Dimon, but truth be told, you’re not! I have an old Santa Claus suit from a dress-up Christmas, er, ‘Holiday’ party, last year. I say we put K.Y. in the suit, station him outside the bank with a red kettle and bell for the next couple of weeks. No one will know it’s him. At the end of each day, he’ll bring in the loot, and voila’! We have our party paid for with ‘other people’s money.’ What do you think of that, B.L.?”
B.L. Zebub: “Dee, it’s sheer genius! I knew I was right to hire you, in spite of those embezzlement rumors floating around a few years ago. This reminds me of 2009 when we got the taxpayer funded TARP money, just in time to pay executive bonuses! Other people’s money is always the best kind!
Well, that’s about all the time we have folks. I’m going to let Les leave first, before K.Y., just to avoid a public skirmish in the parking lot. Lucy, please prepare a transcript of this meeting, and make sure to scrub it for any embarrassing statements. Remember, don’t let one of those Julian Assange acolytes get ahold of it. The last conference we had, Lucy’s transcript appeared in one of Phil Querin’s blog posts! If I ever meet that gadfly Querin, there’ll be Hell to pay. And believe me, I know a thing or two about Hell!”Posted in B. L. Zebub, Belial Bank, Deficiency Liability, Financial Crisis, Foreclosure, Foreclosure Mills, Legislation - Federal, Lenders, Market Conditions, MERS, Real Estate/Distressed, Realtors, REOs, Servicers, Subprime Crisis, Tax Issues | Tagged B.L. Zebub, Bank Ethics?, Belial Bank, Distressed Transactions, Financial Crisis, Foreclosure, Foreclosure Mills, Legislation - Oregon, Market Conditions, MERS, Mortgages, Rating Agencies, Realtors, REOs, Securitization, Servicers, Wall Street