60 Minutes covers bogus foreclosure documents

Just when you think the issues related to mortgage fraud couldn't get any worse, they do. Last night, 60 Minutes covered the story of lenders which outsourced their foreclosure process to outside firms, who in turn hired untrained bodies -- aka 'robosigners' -- for $10/hour to pretend they were officers of the banks and sign thousands of documents per day.

Only problem? Many of those forms weren't filled out correctly (often laughably so), which has slowed down the entire foreclosure process. Of course the banks which hired these firms -- companies such as Bank of America, Wells Fargo, Citibank and others -- deny any knowledge of these irresponsible practices. So who's going to jail for this huge fraud? As usual in this country, no one. They'll probably pay (another) fine and call it a day.

60 Minutes interviews Fed Chairman Ben Bernanke

Last week, 60 Minutes correspondent Scott Pelley went on a ride-along with the FDIC when taking over a bank outside of Chicago. This week, he interviews Federal Reserve Chairman Ben Bernanke and asks the question, "When does this end?" First, from CBSNews.com:

"Mr. Chairman, I'm gonna start with a question that everyone wants me to ask: when does this end?" 60 Minutes correspondent Scott Pelley asked Bernanke.

"It depends a lot on the financial system," he replied. "The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis. We've seen some progress in the financial markets, absolutely. But until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan. We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."

Asked if he thinks the recession is going to end this year, Bernanke said, "In the sense that this decline will begin to moderate and we'll begin to see leveling off. We won't be back to full employment. But we will see, I hope, the end of these declines that have been so strong in a last couple of quarters."

"But you wouldn't say at this point that we're out of the woods?" Pelley asked.

"No," Bernanke replied. "I think the key issue is the banking system and the financial system."

"Unemployment, as we sit here, is about 8.1 percent. I wonder, do you expect double digit unemployment?" Pelley asked.

"Well, it's hard to forecast exactly where we're going. Unemployment is rising. Job losses are still very severe. And no doubt, the unemployment rate's gonna go higher than it is. But I think, again, that if we do succeed in stabilizing the financial system, that we'll begin to see a slower pace of decline, and eventually, a stabilization that will set the basis for a recovery," Bernanke said.

"You seem to be saying that we're not heading into a new American Depression?" Pelley asked.

"I think we've averted that risk. I think we've gotten past that and now the problem is to get the thing working properly again," the chairman said.

The video is in two parts. First, part one:



Next, part two:

60 Minutes profiles an FDIC bank takeover

Wonder what happens to a bank when it's taken over by the FDIC? 60 Minutes was recently allowed unprecedented access because the FDIC wants the public to know what happens during one of these takeovers. FDIC Sheila Bair says they expect to spend $65 billion on these takeovers over the next five years -- certainly relative chump change versus the recent stimulus package, and an amount that may certainly rise. From a CBSNews.com story:

A lot of people are worried about their banks these days. While devastated giants like Citigroup get bailed out again and again and again, many smaller banks are failing. The federal agency that takes over unsound banks is the Federal Deposit Insurance Corporation - the same people who guarantee depositors won't lose their money.

Most every Friday night now the FDIC seizes several banks. You haven't seen these takeovers happening because they're done secretly at night to make sure there's no needless panic by depositors. But last week 60 Minutes and correspondent Scott Pelley were given extraordinary access to one of these operations because the FDIC wants you to know what happens to your money when your bank has failed...

60 Minutes covers the World Savings option ARM fiasco

Last night, 60 Minutes covered the story of a mortgage salesman named Paul Bishop with World Savings, who discusses some of the standard practices of the day at a company which heavily promoted toxic Option ARM loans and other no-doc alternatives. The damage so far? $37 billion and counting.

Three years before the housing market crash, Paul Bishop says he warned his superiors at World Savings - the nation's second largest savings and loan company - that many of the mortgages they were granting were misleading and predatory.

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So why didn't he or anyone else step up in a public way? Because, at least in my own experience, when people have mortgages and car loans to pay and kids to feed, looking the other way becomes the most practical (and cowardly) way to keep a job. As someone who regularly speaks his mind, I can personally attest to the perils of losing clients who simply went elsewhere to find someone willing to play ball (and you can thank numerous bankruptcies of development deals for that short-sightedness).

So is this country ready to start listening to people willing to ignore petty politics in search of the truth? That certainly remains to be seen. Perhaps seeing some former executives of those companies engaging in fraud (i.e., mortgage companies, Wall Street companies, ratings agencies and certain consultants) doing the perp walk for a nice long prison sentence would get the ball rolling in that direction?