ROL_2009-08-14_16k_Hr1-2.timecode

[00:00.000 --> 00:04.960]  This news brief brought to you by the International Newsnet.
[00:04.960 --> 00:12.280]  In Iraq Friday, a car bomb devastated a Shiite mosque, killing 37 pilgrims.
[00:12.280 --> 00:18.480]  A new CNN opinion poll shows popular support for the Afghanistan war is at an all-time
[00:18.480 --> 00:19.480]  low.
[00:19.480 --> 00:24.520]  54 percent of respondents are opposed and only 41 percent in favor.
[00:24.520 --> 00:30.520]  Wednesday's CIA drone strike in South Waziristan, which killed Taliban leader Betullah Mesud's
[00:30.520 --> 00:36.200]  second wife and injured several children, may have also killed Mesud himself.
[00:36.200 --> 00:40.880]  This news brief brought to you by the International Newsnet.
[00:40.880 --> 00:46.880]  A court in Virginia heard Thursday guards employed by the U.S. security company Blackwater
[00:46.880 --> 00:51.520]  shot and killed Iraqis in allegedly unprovoked and random attacks.
[00:51.520 --> 00:57.320]  The court also received sworn statements from former Blackwater employees alleging that
[00:57.320 --> 01:02.960]  Eric Prince, the company's founder, views himself as a Christian crusader tasked with
[01:02.960 --> 01:05.640]  eliminating Muslims and the Islamic faith.
[01:05.640 --> 01:10.800]  They also accused the company of following a policy of deliberate killings and arms dealing
[01:10.800 --> 01:16.800]  and of employing people unfit or improperly trained to handle lethal weapons.
[01:16.800 --> 01:22.440]  In Baghdad Thursday, some Iraqis said they believed the case was a last chance for justice
[01:22.440 --> 01:27.360]  and an opportunity for America to divorce the behavior of its military from private
[01:27.360 --> 01:28.360]  contractors.
[01:28.360 --> 01:34.720]  Fareed Walid, who was shot in Nisour Square two years ago during a massacre that killed
[01:34.720 --> 01:41.080]  17 Iraqis, said everybody here knows of cases where Blackwater guards shot innocent people
[01:41.080 --> 01:47.640]  without a second thought.
[01:47.640 --> 01:52.400]  In Afghanistan, a U.S. military helicopter Thursday attacked a group of what it believed
[01:52.400 --> 01:57.360]  were militants loading munitions into a van, killing five of them.
[01:57.360 --> 02:02.800]  According to police in Kandahar province, they were farm workers loading cucumbers.
[02:02.800 --> 02:08.500]  Despite police confirming the van it hit was full of cucumbers, NATO maintained those it
[02:08.500 --> 02:10.200]  killed were militants.
[02:10.200 --> 02:14.600]  The attack is the second disputed incident of civilian killings in Kandahar province
[02:14.600 --> 02:16.280]  in as many days.
[02:16.280 --> 02:21.560]  The previous night, another helicopter launched an attack on a family compound killing four
[02:21.560 --> 02:23.960]  people, three of them children.
[02:23.960 --> 02:27.600]  The family insists the four were sleeping at the time of the attack.
[02:27.600 --> 02:33.800]  NATO insists they were carrying plastic jugs and assumes they were planting roadside bombs.
[02:33.800 --> 02:39.280]  NATO maintains the four were insurgents despite the fact three of them were children.
[02:39.280 --> 02:43.640]  The two incidents come just a week after a U.N. report cautioned the war is taking a
[02:43.640 --> 02:46.960]  rising toll on the civilian population.
[02:46.960 --> 03:01.120]  Top of the hour news brought to you by INN World Report.
[03:01.120 --> 03:04.600]  You feel tired when talking about important topics like money and politics?
[03:04.600 --> 03:05.600]  Sorry!
[03:05.600 --> 03:08.440]  Are you confused by words like the Constitution or the Federal Reserve?
[03:08.440 --> 03:09.440]  What?
[03:09.440 --> 03:13.400]  If so you may be diagnosed with the deadliest disease known today, stupidity.
[03:13.400 --> 03:18.760]  Hi, my name is Steve Holt and like millions of other Americans I was diagnosed with stupidity
[03:18.760 --> 03:19.960]  at an early age.
[03:19.960 --> 03:23.940]  I had no idea that the number one cause of the disease is found in almost every home
[03:23.940 --> 03:26.080]  in America, the television.
[03:26.080 --> 03:31.080]  Unfortunately that puts most Americans at risk of catching stupidity but there is hope.
[03:31.080 --> 03:34.840]  The staff at Brave New Books have helped me and thousands of other foxaholics suffering
[03:34.840 --> 03:39.720]  from sports-zombie-ism recover and because of Brave New Books I now enjoy reading and
[03:39.720 --> 03:44.640]  watching educational documentaries without feeling tired or uninterested so if you or
[03:44.640 --> 03:51.920]  anybody you know suffers from stupidity then you need to call 512-480-2503 or visit them
[03:51.920 --> 03:55.560]  in 1904 Guadalupe or bravenewbookstore.com.
[03:55.560 --> 03:58.920]  Side effects from using Brave New Books products may include discernment and enlarged vocabulary
[03:58.920 --> 04:00.920]  and an overall increase in mental functioning.
[04:00.920 --> 04:07.920]  You are listening to the Rule of Law Radio Network at ruleoflawradio.com, live free speech
[04:07.920 --> 04:32.120]  talk radio at its best.
[04:38.920 --> 04:49.920]  Bad boys, bad boys, whatcha gonna do, whatcha gonna do when they come for you, bad boys,
[04:49.920 --> 04:54.920]  bad boys, whatcha gonna do, whatcha gonna do when they come for you.
[04:54.920 --> 04:59.920]  When you were eight and you had bad dreams, you'd go to school and learn the golden rules,
[04:59.920 --> 05:02.920]  so why are you acting like a bloody fool?
[05:02.920 --> 05:09.920]  Bad boys, bad boys, whatcha gonna do, whatcha gonna do when they come for you, bad boys,
[05:09.920 --> 05:15.920]  bad boys, whatcha gonna do, whatcha gonna do when they come for you,
[05:15.920 --> 05:20.920]  You chuck it on that one, you chuck it on this one, you chuck it on your mother and you chuck
[05:20.920 --> 05:23.920]  it on your father, you chuck it on your brother and you chuck it on your sister, you chuck
[05:23.820 --> 05:26.920]  it on that one and you chuck it on these!
[05:26.920 --> 05:32.920]  Bad boys, bad boys, whatcha gonna do? Whatcha gonna do when they come for you?
[05:32.920 --> 05:37.920]  Bad boys, bad boys, whatcha gonna do? Whatcha gonna do when they come for you?
[05:37.920 --> 05:42.920]  Bad boys, bad boys, whatcha gonna do? Whatcha gonna do when they come for you?
[05:42.920 --> 05:48.920]  Bad boys, bad boys, whatcha gonna do? Whatcha gonna do when they come for you?
[05:48.920 --> 05:52.920]  My body now giving over age, police now giving over age
[05:52.920 --> 05:54.920]  Okay, this is the rule of law.
[05:54.920 --> 05:59.920]  Randy Kelton and Deborah Stevens and Eddie Craig, of course.
[05:59.920 --> 06:02.920]  Upper-lower case, of course.
[06:02.920 --> 06:07.920]  Bar and an old line from one of our hosts who's no longer with us.
[06:07.920 --> 06:12.920]  At any rate, tonight we have a very special guest with us.
[06:12.920 --> 06:18.920]  We've got Paul from Texas who's going to be going over the mortgage industry,
[06:18.920 --> 06:21.920]  history of the mortgage industry, and some of his background.
[06:21.920 --> 06:27.920]  He's going to be talking about how it all works, how it developed into what it is today,
[06:27.920 --> 06:33.920]  and how these mortgages are turned into securities instruments
[06:33.920 --> 06:39.920]  that are traded on the market that have abusive numbers and all this sort of thing.
[06:39.920 --> 06:41.920]  And for those of you, before we start off with our guest,
[06:41.920 --> 06:44.920]  for those of you who are interested in the seminar, traffic seminar,
[06:44.920 --> 06:51.920]  due process seminar that Eddie Craig, Randy Kelton, and myself will be presenting coming up,
[06:51.920 --> 06:59.920]  please go to the website ruleoflawradio.com for more information and registration instructions.
[06:59.920 --> 07:05.920]  We need 20 people who are committed so that we can go ahead and book the date.
[07:05.920 --> 07:10.920]  We've got about eight or nine so far, so the seats are filling up fast.
[07:10.920 --> 07:15.920]  We're limiting the registration to 50 because that's all that will fit into Brave New Books.
[07:15.920 --> 07:20.920]  So we're cutting it off at 50, so register early and get your copy of Jurisdictionary.
[07:20.920 --> 07:24.920]  Ahead of time so you can go over it and be prepared for the class
[07:24.920 --> 07:33.920]  because many of the remedies that we will be presenting will require some background information
[07:33.920 --> 07:35.920]  that you will get from Jurisdictionary.
[07:35.920 --> 07:42.920]  So it's an excellent deal, $400, a two-day seminar all day Saturday and Sunday.
[07:42.920 --> 07:44.920]  It will be over a weekend at Brave New Books.
[07:44.920 --> 07:52.920]  Again, we'll set the date once we have 20 committed participants and you get a copy of Jurisdictionary.
[07:52.920 --> 07:59.920]  We also have a special deal going for couples, $600 for the couple,
[07:59.920 --> 08:02.920]  and you get one copy of Jurisdictionary to share.
[08:02.920 --> 08:04.920]  But that's only for couples, okay?
[08:04.920 --> 08:08.920]  You have to live together at the same address.
[08:08.920 --> 08:12.920]  You can't just like sign up with a friend and share a copy.
[08:12.920 --> 08:14.920]  We can't do that, okay?
[08:14.920 --> 08:17.920]  So if you're a couple, you live at the same address.
[08:17.920 --> 08:21.920]  We won't discriminate gender-wise based on your coupleness,
[08:21.920 --> 08:25.920]  but at least you have to be living together.
[08:25.920 --> 08:27.920]  You have to be a couple, all right?
[08:27.920 --> 08:32.920]  You know, you get my drift, what I'm trying to say here, so please don't try to scam us.
[08:32.920 --> 08:37.920]  We're doing everything we can, bending over backwards to help as many people as possible
[08:37.920 --> 08:43.920]  with the information that they need so that they can fight these rogue traffic tickets
[08:43.920 --> 08:50.920]  and reclaim our rights and liberties and fix the court system, fix the system in general.
[08:50.920 --> 08:56.920]  So we ask the callers to please hold off on your calls for about an hour or so.
[08:56.920 --> 09:00.920]  Many of your questions will be answered by Paul regarding the mortgage industry
[09:00.920 --> 09:03.920]  if you'll just hold off on the calls.
[09:03.920 --> 09:08.920]  So let's let Paul present his material and then we will start taking calls later this hour
[09:08.920 --> 09:11.920]  or at the top of the 9 o'clock hour.
[09:11.920 --> 09:16.920]  So with that being said, Paul, thank you for joining us tonight.
[09:16.920 --> 09:19.920]  Well, thank you for having me, Deborah.
[09:19.920 --> 09:26.920]  And I guess when you're dealing with a large group or a large audience,
[09:26.920 --> 09:31.920]  you don't always know how far along each and every person might be.
[09:31.920 --> 09:38.920]  And so what I hope to be able to do is start out with some basics as to how this is developed
[09:38.920 --> 09:42.920]  and kind of take you from where we started to where we've ended up
[09:42.920 --> 09:48.920]  and discuss a little bit about fiat currency and the money.
[09:48.920 --> 09:55.920]  By way of some of my history, I have an undergraduate degree in industrial psychology
[09:55.920 --> 09:58.920]  and a graduate degree in banking and finance.
[09:58.920 --> 10:06.920]  I was registered with NASD, which was National Association of Securities Dealers, about 1970.
[10:06.920 --> 10:12.920]  I was registered with the New York Stock Exchange in 1973, I believe it was.
[10:12.920 --> 10:16.920]  I've got about seven different licenses.
[10:16.920 --> 10:21.920]  One is a general securities principal license
[10:21.920 --> 10:26.920]  and have worked for a number of very well-known brokerage houses over the years,
[10:26.920 --> 10:29.920]  a number of them are no longer around.
[10:29.920 --> 10:32.920]  Some of them people may have heard of.
[10:32.920 --> 10:37.920]  Others that didn't advertise as much may not be as familiar,
[10:37.920 --> 10:42.920]  but these companies were all started back in some of them in the 1880s and 1890s.
[10:42.920 --> 10:48.920]  And many of them have been absorbed by other broker dealers or investment banks.
[10:48.920 --> 10:54.920]  And so I guess the most prominent one as far as advertising went was
[10:54.920 --> 11:00.920]  I was a branch office manager for EF Hutton Company for about 11 years.
[11:00.920 --> 11:04.920]  Hutton went out of business because of the ability they had to kite funds.
[11:04.920 --> 11:08.920]  They would take money in on the East Coast and deposit it
[11:08.920 --> 11:13.920]  and then would wire it out of a West Coast bank four, five, or six days later,
[11:13.920 --> 11:19.920]  and they worked on the float, and at the time they were depositing in the millions of dollars a day.
[11:19.920 --> 11:23.920]  So it was a very lucrative practice for them until they got caught at it.
[11:23.920 --> 11:28.920]  And over a weekend they were absorbed by Lehman Brothers.
[11:28.920 --> 11:33.920]  Lehman Brothers has been in the news here recently with some of the problems that they dealt with
[11:33.920 --> 11:36.920]  with what's taking place in the mortgage industry.
[11:36.920 --> 11:41.920]  And I've listened to a number of your calls where you had people get on
[11:41.920 --> 11:46.920]  and talk a little bit about, you know, the mortgage industry and the money
[11:46.920 --> 11:50.920]  and how these systems are structured.
[11:50.920 --> 12:01.920]  And back in 1933 when the currency was taken away from us in the form of the HDR-192
[12:01.920 --> 12:08.920]  and we went off the gold standard and the bank holiday was declared,
[12:08.920 --> 12:14.920]  Roosevelt did that to more or less stem the panic
[12:14.920 --> 12:17.920]  and hopefully through some of the activity that took place
[12:17.920 --> 12:20.920]  with the Securities and Exchange Act of 1933 and 1934
[12:20.920 --> 12:23.920]  and the Investment Company Act of 1940,
[12:23.920 --> 12:28.920]  he tried to instill some confidence back into the banking industry.
[12:28.920 --> 12:32.920]  But one of the things that they did then was they eliminated anybody's ability
[12:32.920 --> 12:37.920]  to actually satisfy a debt through payment.
[12:37.920 --> 12:40.920]  All you could do at that point forward was discharge debt.
[12:40.920 --> 12:47.920]  And they have done everything in their power to bury how that process works
[12:47.920 --> 12:51.920]  so that people that earn a living and deposit money in banks
[12:51.920 --> 12:56.920]  and then write checks against them think that they're actually paying for their bills.
[12:56.920 --> 13:00.920]  But my understanding of what Roosevelt was able to accomplish
[13:00.920 --> 13:06.920]  is he took the entire asset base of this country plus all the people who were alive then
[13:06.920 --> 13:11.920]  and any future people would come along and he pledged that collateral,
[13:11.920 --> 13:17.920]  that ability to generate energy through work in order to create
[13:17.920 --> 13:23.920]  an ongoing fiat currency system that was managed by the Federal Reserve banks.
[13:23.920 --> 13:31.920]  And they created a piece of legislation back then called the Glass-Steagall Act,
[13:31.920 --> 13:36.920]  which came along, I forget what year it was enacted,
[13:36.920 --> 13:41.920]  but it basically kept the insurance industry and the investment banking industry
[13:41.920 --> 13:46.920]  and the banking industry from overstepping each other's territory.
[13:46.920 --> 13:50.920]  And we operated fairly well under that rule.
[13:50.920 --> 13:53.920]  I had a few panics and a few recessions and so forth,
[13:53.920 --> 13:58.920]  but they were able to avoid another deep discount situation,
[13:58.920 --> 14:04.920]  such as what occurred in what we term the Great Depression.
[14:04.920 --> 14:10.920]  And the banking industry did quite well for itself until the Glass-Steagall Act was repealed,
[14:10.920 --> 14:14.920]  and that allowed insurance companies to get into the banking business
[14:14.920 --> 14:18.920]  and allowed Walmart to get into the banking business.
[14:18.920 --> 14:22.920]  And that's kind of where we find ourselves today.
[14:22.920 --> 14:30.920]  And this really took hold back in the end of Clinton's first term,
[14:30.920 --> 14:40.920]  94, early 95, where they started to realize that they were spending an awful lot more
[14:40.920 --> 14:42.920]  than they were able to take in,
[14:42.920 --> 14:45.920]  and they blamed a lot of that on Bush's and Reagan's tax cuts,
[14:45.920 --> 14:48.920]  although the federal government had more revenue after those tax cuts
[14:48.920 --> 14:50.920]  than they ever enjoyed before.
[14:50.920 --> 14:54.920]  But Clinton's interest was to expand,
[14:54.920 --> 14:59.920]  and he was very big on trying to make the American dream
[14:59.920 --> 15:02.920]  of everyone being able to own a home a reality,
[15:02.920 --> 15:06.920]  whether the people that he was trying to help could actually pay for the home or not.
[15:06.920 --> 15:13.920]  And so they created a number of additional agencies within the government
[15:13.920 --> 15:16.920]  to create backing for the mortgage business.
[15:16.920 --> 15:22.920]  Initially you had the VA and the FHA, Federal Housing Association,
[15:22.920 --> 15:28.920]  and then they've come along with Jenny Mae, Fannie Mae, Freddie Mac, all these agencies.
[15:28.920 --> 15:35.920]  And with the Congress able to control some of that is how they installed some of these rules,
[15:35.920 --> 15:43.920]  which took the mortgage business into a number of what we called in the industry, tranches.
[15:43.920 --> 15:49.920]  And when they were reissuing,
[15:49.920 --> 15:53.920]  I might go through I guess a little bit about the monetary system so that maybe people,
[15:53.920 --> 16:00.920]  probably the best book that's ever been written about how money is actually designed and developed is a book
[16:00.920 --> 16:05.920]  that was issued by I believe the Chicago Federal Reserve Bank called Modern Money Mechanics.
[16:05.920 --> 16:11.920]  And it truly explains in very, very easy to understand detail what a bank actually does
[16:11.920 --> 16:21.920]  when you make a deposit to a bank and how they switch that currency from what you consider to be real money.
[16:21.920 --> 16:25.920]  And they make it look like it's real money,
[16:25.920 --> 16:33.920]  except it's money that they have created on a separate set of books that you never get to see.
[16:33.920 --> 16:39.920]  They transfer this money internally on the bank's books.
[16:39.920 --> 16:49.920]  The banks create an asset and debit account on the backside of what we call the back office set of books.
[16:49.920 --> 16:58.920]  And they use the principle of the money changers used back 6,000 years ago
[16:58.920 --> 17:04.920]  when they were holding gold for people and realized that people had deposited gold for their safekeeping.
[17:04.920 --> 17:10.920]  Only about 10 percent of those people ever came forward and asked for that gold back.
[17:10.920 --> 17:18.920]  So the money changers were able to issue script, and they came up with the 90-10 ratio,
[17:18.920 --> 17:23.920]  which meant that for every $100 of value that was put in there,
[17:23.920 --> 17:30.920]  they only had to really account or keep on deposit 10 percent, and they were able to loan out 90 percent.
[17:30.920 --> 17:36.920]  And this has been true of every fiat currency that's been created ever since that time.
[17:36.920 --> 17:44.920]  And to the best of my knowledge today, there hasn't been a fiat currency that's ever survived more than about 100 years.
[17:44.920 --> 17:54.920]  And it gets into the situation that we're in in this country today that they've got trillions and trillions of dollars pledged,
[17:54.920 --> 18:04.920]  and they don't have the asset base or the energy to be able to ever sustain it or even to pay it off.
[18:04.920 --> 18:08.920]  And so that's why we're in some of the problems that we're in today.
[18:08.920 --> 18:15.920]  But the brokerage community, which has taken quite a bit of blame for how all this housing industry has collapsed,
[18:15.920 --> 18:21.920]  they were only doing what they get paid to do, and that is to generate revenue for the brokerage firm
[18:21.920 --> 18:27.920]  and for the stockholders of that firm and the government through the way they structured the law
[18:27.920 --> 18:35.920]  and then the oversight of how they were operating allowed these things to become intermingled
[18:35.920 --> 18:41.920]  into what we note in the current marketplace as mortgage-backed instruments.
[18:41.920 --> 18:45.920]  There are also index funds made up of these mortgage-backed instruments.
[18:45.920 --> 18:49.920]  There are derivatives that are made up of these mortgage-backed instruments.
[18:49.920 --> 18:56.920]  And prior to the repeal of Glass-Steagall, whenever a bank was putting together a pool,
[18:56.920 --> 19:04.920]  an investment pool of mortgages, they were classified like all of the rating industry,
[19:04.920 --> 19:13.920]  Moody's or S&P or they're a AA or an A or an A- or a BBB kind of rating,
[19:13.920 --> 19:20.920]  and the investment community was limited to what type of bonds they would put in that portfolio
[19:20.920 --> 19:26.920]  so that when it was remarketed to the investing public,
[19:26.920 --> 19:35.920]  they were pretty well assured that that percentage or that portfolio would have a high degree of assurance.
[19:35.920 --> 19:38.920]  And when they first started doing this, they always went through
[19:38.920 --> 19:43.920]  and got it guaranteed by some government agency in that you could go out and market this
[19:43.920 --> 19:49.920]  to the investing public saying how would you like to earn 7% on your money and have it guaranteed
[19:49.920 --> 19:53.920]  and, you know, useful life of probably 12 to 15 years,
[19:53.920 --> 19:58.920]  the investment banking business knowing that every mortgage has an average life of seven years
[19:58.920 --> 20:01.920]  so that the portfolio would turn in, you know, seven to ten years,
[20:01.920 --> 20:06.920]  but they were trying to market it with a 12 to 15 year holding period.
[20:06.920 --> 20:11.920]  But the trick bang is that this is all government insured, government guaranteed.
[20:11.920 --> 20:13.920]  You can't lose your money.
[20:13.920 --> 20:17.920]  And as I say initially, that was pretty well the case,
[20:17.920 --> 20:22.920]  and I was involved with, you know, not only the structuring and development of those type plans,
[20:22.920 --> 20:28.920]  but also triple net leased real estate and equipment leasing, motion picture financing.
[20:28.920 --> 20:33.920]  We did a lot of things like that, but at the time it was being done,
[20:33.920 --> 20:41.920]  back in the early 80s to say the first part of the 90s, these deals were fairly secure.
[20:41.920 --> 20:49.920]  And what started to trip the investment community up was Reagan's Tax Act of 1986
[20:49.920 --> 20:52.920]  and then the Technical Corrections Act of 1987.
[20:52.920 --> 20:57.920]  That basically destroyed the commercial real estate market at that time.
[20:57.920 --> 21:03.920]  It didn't have much to do with the domestic or the retail housing industry,
[21:03.920 --> 21:08.920]  but it certainly had a huge impact on commercial real estate.
[21:08.920 --> 21:14.920]  And in order for the investment banks and the government to continue to offer and make loans,
[21:14.920 --> 21:20.920]  they had to come up with a method of pooling more and more and more of these mortgages,
[21:20.920 --> 21:28.920]  and so they started to commingle AAA and AA instruments in with what are now known
[21:28.920 --> 21:32.920]  pretty much throughout the world as subprime mortgages.
[21:32.920 --> 21:40.920]  And the problem that they encountered with these subprime mortgages was that a larger number of those
[21:40.920 --> 21:46.920]  were being, people were not able to keep up with their payments.
[21:46.920 --> 21:52.920]  And I think anyone that's watched or listened to the news over the last 18 or 20 months
[21:52.920 --> 21:57.920]  has realized just what the impact this has had.
[21:57.920 --> 22:04.920]  But the problem that everyone is not addressing is that there has never been any real money
[22:04.920 --> 22:06.920]  into any of these things.
[22:06.920 --> 22:08.920]  The bank has never been able to loan money.
[22:08.920 --> 22:13.920]  There's not a bank anywhere that's a national or state bank that has authorized to loan money.
[22:13.920 --> 22:16.920]  They're just switching currency.
[22:16.920 --> 22:21.920]  You go in as a borrower and you create money or currency by signing a note.
[22:21.920 --> 22:28.920]  And the bank takes that signed note and they withhold 10% of it to secure the fact that,
[22:28.920 --> 22:31.920]  you know, they're keeping their reserve up.
[22:31.920 --> 22:34.920]  And that note now is just like money.
[22:34.920 --> 22:35.920]  It looks like money.
[22:35.920 --> 22:36.920]  It tastes like money.
[22:36.920 --> 22:37.920]  It's endorsed just like money.
[22:37.920 --> 22:42.920]  And the bank deposits that note, which is a lien on your property as money.
[22:42.920 --> 22:50.920]  And from that deposit it's able to let the Federal Reserve monetize it.
[22:50.920 --> 22:54.920]  And that just generated more revenue for that bank to make more loans.
[22:54.920 --> 22:58.920]  So the next guy that comes in and wants to borrow money to buy a boat,
[22:58.920 --> 23:01.920]  they're taking monetized money off of your mortgage
[23:01.920 --> 23:04.920]  and they're making a loan to him for that boat loan.
[23:04.920 --> 23:10.920]  And say he buys a $25,000 boat and he puts $5,000 down on it,
[23:10.920 --> 23:15.920]  they issue a promissory note to him for $20,000
[23:15.920 --> 23:18.920]  and they immediately turn around and do the exact same thing to that boat loan
[23:18.920 --> 23:23.920]  that they did with the mortgage loan, and it becomes monetized.
[23:23.920 --> 23:28.920]  And they go back to the Fed window and they, you know,
[23:28.920 --> 23:32.920]  they keep doing this with every deposit.
[23:32.920 --> 23:36.920]  Every time you get paid a check and put money in the account,
[23:36.920 --> 23:38.920]  two sets of books get credited.
[23:38.920 --> 23:43.920]  You're checking an account that you can see and you know you have a value in it.
[23:43.920 --> 23:48.920]  And then the back office set of books, which has an asset and deposit line in it,
[23:48.920 --> 23:52.920]  and the asset side is immediately credited to the Fed window
[23:52.920 --> 23:57.920]  and that creates more revenue for that bank to use.
[23:57.920 --> 24:03.920]  And the only thing the Fed does, how they control how much money is in issuance
[24:03.920 --> 24:08.920]  or in circulation, is by raising or lowering the interest rates
[24:08.920 --> 24:13.920]  or increasing or decreasing the reserve requirements of the various banks.
[24:13.920 --> 24:17.920]  Right, and Paul, this is kind of the way I figured it has been going.
[24:17.920 --> 24:25.920]  Can you please tell us how they actually, you're saying they deposit the notes, okay,
[24:25.920 --> 24:28.920]  and then they get that amount from the Federal Reserve.
[24:28.920 --> 24:30.920]  How exactly does that work?
[24:30.920 --> 24:34.920]  I mean, do they have to send the note in, the original signature note,
[24:34.920 --> 24:36.920]  do they have to send that to the Federal Reserve?
[24:36.920 --> 24:40.920]  No, that's all done as a computer transaction.
[24:40.920 --> 24:42.920]  They may send a fax home.
[24:42.920 --> 24:46.920]  You see, the banks have regulators and inspectors that come around,
[24:46.920 --> 24:53.920]  and so they maintain those promissory notes in their possession initially,
[24:53.920 --> 24:58.920]  but they have, you sign the front, if you've ever looked at a note,
[24:58.920 --> 25:01.920]  you'll notice it's never been signed by more than one party,
[25:01.920 --> 25:06.920]  unless it's a husband and wife, but no one from the bank has ever signed a note.
[25:06.920 --> 25:11.920]  So it's a negotiable instrument at that point, and they can turn it over.
[25:11.920 --> 25:16.920]  What's on the back of these notes is where you make what's called an allonge.
[25:16.920 --> 25:18.920]  An allonge is nothing more than an endorsement,
[25:18.920 --> 25:24.920]  and that's one of the real problems today with anyone that's in a foreclosure situation,
[25:24.920 --> 25:27.920]  getting these banks, there are several problems with that,
[25:27.920 --> 25:32.920]  and one of the main problems is the banks never wish you to see the endorsement
[25:32.920 --> 25:39.920]  on the backside of the note, what their allonge was, who they paid this note to.
[25:39.920 --> 25:43.920]  And who they paid it to was this back office account,
[25:43.920 --> 25:50.920]  and they have a set of books that they're all tied into.
[25:50.920 --> 25:53.920]  It doesn't matter how small the bank is or how large the bank is,
[25:53.920 --> 25:59.920]  either the bank itself is a direct corresponding bank to the Federal Reserve,
[25:59.920 --> 26:02.920]  or they have somebody in the bank system.
[26:02.920 --> 26:05.920]  You go down to Freer, Texas, or San Diego, Texas,
[26:05.920 --> 26:10.920]  there's no Federal Reserve branch at Freer National Bank.
[26:10.920 --> 26:13.920]  But Freer corresponds with Frost Bank in San Antonio,
[26:13.920 --> 26:19.920]  and Frost Bank has a direct account with the Federal Reserve.
[26:19.920 --> 26:24.920]  These bankers all have documentation that each bank, it's all set up,
[26:24.920 --> 26:29.920]  it's all regulation Z is where it comes down from,
[26:29.920 --> 26:34.920]  and so they have their forms that are all approved by the Federal Reserve.
[26:34.920 --> 26:35.920]  They complete the form.
[26:35.920 --> 26:40.920]  They're attesting to the fact that you are a signatory on that promissory note,
[26:40.920 --> 26:47.920]  and they're making a credit entry for their account with the Federal Reserve.
[26:47.920 --> 26:49.920]  There are 13 Federal Reserve districts,
[26:49.920 --> 26:52.920]  and they're making a credit deposit,
[26:52.920 --> 26:55.920]  or they're crediting their account with the Fed for that amount.
[26:55.920 --> 26:57.920]  So that's a $100,000 promissory note.
[26:57.920 --> 27:01.920]  That one ends a $100,000 deposit to the bank.
[27:01.920 --> 27:08.920]  You take that amount times 90 is what that instrument's worth to that bank.
[27:08.920 --> 27:12.920]  So you have now $900,000.
[27:12.920 --> 27:14.920]  The bank has the ability to go to the Fed window
[27:14.920 --> 27:19.920]  and borrow $900,000 at what is called the banker or broker call loan rate,
[27:19.920 --> 27:25.920]  which is always a lower rate than what prime would be.
[27:25.920 --> 27:27.920]  And that's how they create the money.
[27:27.920 --> 27:30.920]  Banks have never had any currency in any loan.
[27:30.920 --> 27:32.920]  I don't care what type of loan it is.
[27:32.920 --> 27:36.920]  It's illegal for them to loan money.
[27:36.920 --> 27:40.920]  So what they're loaning is not really money.
[27:40.920 --> 27:43.920]  They're loaning additional promissory notes.
[27:43.920 --> 27:46.920]  If you look at any Federal Reserve note, it says legal tender,
[27:46.920 --> 27:49.920]  but it's a promissory note.
[27:49.920 --> 27:55.920]  So that's the whole issue and problem of not being on a precious metal standard,
[27:55.920 --> 27:58.920]  or what we call the gold or silver standard,
[27:58.920 --> 28:04.920]  is that there is absolutely no limit to how much of that paper can be printed.
[28:04.920 --> 28:09.920]  Now, the Federal Government puts certain ceiling on what their debt would be.
[28:09.920 --> 28:12.920]  And back before they discontinued publishing,
[28:12.920 --> 28:17.920]  they used to publish M1, M2, and M3 numbers.
[28:17.920 --> 28:21.920]  They quit publishing those numbers a year old,
[28:21.920 --> 28:24.920]  I'm just going to say about three, maybe a little better than three years ago,
[28:24.920 --> 28:27.920]  made it much more difficult for anyone to really determine
[28:27.920 --> 28:30.920]  how much money is actually in circulation.
[28:30.920 --> 28:32.920]  Part of the reason they did that, in my opinion,
[28:32.920 --> 28:37.920]  was to kind of hide how much debt was being created in this country,
[28:37.920 --> 28:41.920]  because they have been selling Treasury notes to overseas companies.
[28:41.920 --> 28:42.920]  They're countries.
[28:42.920 --> 28:48.920]  China probably owns the majority of our Treasury.
[28:48.920 --> 28:50.920]  And the problem with, you know, everyone says,
[28:50.920 --> 28:54.920]  well, China will never do anything to call that
[28:54.920 --> 28:58.920]  because of all the revenue that China makes, you know,
[28:58.920 --> 29:00.920]  for us buying their products.
[29:00.920 --> 29:07.920]  What China sells us in the farm of products is about five percent of China's GDP.
[29:07.920 --> 29:11.920]  That's not a huge amount of revenue when you look at how large China is
[29:11.920 --> 29:16.920]  and what, you know, what their industrial base is developing into.
[29:16.920 --> 29:21.920]  So I'm a little less confident that China will never do anything
[29:21.920 --> 29:23.920]  in the way of starting to liquidate the dollar
[29:23.920 --> 29:28.920]  and getting out from under the dollar as being the currency of choice worldwide.
[29:28.920 --> 29:29.920]  I think they already have.
[29:29.920 --> 29:32.920]  And you hear a lot and see a lot of it.
[29:32.920 --> 29:35.920]  Yeah, I think they already have.
[29:35.920 --> 29:42.920]  Well, they haven't bought any of our – I can't factually prove what I'm about to say,
[29:42.920 --> 29:46.920]  but I've got fairly good evidence that the last six or seven sales
[29:46.920 --> 29:48.920]  that have taken place by the Treasury,
[29:48.920 --> 29:52.920]  they have sent the money to the various banks in the Cayman Islands
[29:52.920 --> 29:55.920]  with instructions from those banks to come around
[29:55.920 --> 29:58.920]  and buy our new paper that we're issuing.
[29:58.920 --> 30:01.920]  So we're using debt, you know, to buy debt.
[30:01.920 --> 30:07.920]  And that's because the Treasuries have not been – they show on –
[30:07.920 --> 30:10.920]  if you pay attention to what they show on the Fed wire,
[30:10.920 --> 30:14.920]  they're always oversubscribed, but I don't believe that.
[30:14.920 --> 30:22.920]  But that's – you know, I can't – I have no hard evidence of that.
[30:22.920 --> 30:27.920]  So, Bill, they take these notes, they – then they turn around
[30:27.920 --> 30:32.920]  and they credit their Federal Reserve account with that amount
[30:32.920 --> 30:38.920]  so that they can turn around and monetize nine times more on top of that
[30:38.920 --> 30:42.920]  for the next person – or I don't want to say person –
[30:42.920 --> 30:46.920]  the next entity that comes along, okay?
[30:46.920 --> 30:52.920]  And so would you like to speak to this – how these turns –
[30:52.920 --> 30:56.920]  how these notes turn into a security instrument?
[30:56.920 --> 31:01.920]  I'd be glad to because you reach a point of what is called diminishing return,
[31:01.920 --> 31:05.920]  but it's the bank's reserve limits.
[31:05.920 --> 31:09.920]  They can only accumulate – they have to have so much in the farm of reserves
[31:09.920 --> 31:15.920]  and they can only get so much back from the Fed window.
[31:15.920 --> 31:20.920]  And so they – let's say they allocate for this year that they're going to make a,
[31:20.920 --> 31:29.920]  you know, I'll just pick a number of – you know, $250 million of mortgage loans.
[31:29.920 --> 31:34.920]  When they reach that cap, they've got all these promissory notes that they've accumulated,
[31:34.920 --> 31:38.920]  you know, it might take them six months, eight months to do something like this.
[31:38.920 --> 31:42.920]  But now they have reached the limit of what they were going to be able to do
[31:42.920 --> 31:45.920]  in the area of mortgage notes.
[31:45.920 --> 31:49.920]  So this is where the brokerage community comes in.
[31:49.920 --> 31:54.920]  They call a investment banking firm, you know, Lehman Brothers or Shearson
[31:54.920 --> 32:02.920]  or a number of them up in New York, and they put together a pool.
[32:02.920 --> 32:05.920]  And let's just say it's Wells Fargo Bank,
[32:05.920 --> 32:08.920]  so it's not just $250 million from this branch,
[32:08.920 --> 32:13.920]  but it's a half a billion dollars throughout Wells Fargo's system.
[32:13.920 --> 32:23.920]  They get the brokerage community to come in, and they structure a secondary mortgage sale
[32:23.920 --> 32:29.920]  through what is, you know, either a mortgage-backed security portfolio
[32:29.920 --> 32:35.920]  or through some type of an index fund or some type of a – they're going to sell.
[32:35.920 --> 32:39.920]  They know that there's going to be a large percentage of these mortgages going to default.
[32:39.920 --> 32:46.920]  The brokerage community might, you know, create a mortgage-backed fund on one hand
[32:46.920 --> 32:55.920]  and a derivative fund to offset the number of foreclosures that are going to take place in this pool.
[32:55.920 --> 32:59.920]  And they have now made money on both sides, because when the foreclosures come,
[32:59.920 --> 33:04.920]  they're going to be able to cover those derivatives at a lower price than they sold them for
[33:04.920 --> 33:07.920]  and close that side of the – it's called a straddle,
[33:07.920 --> 33:10.920]  but basically they're going to close that straddle,
[33:10.920 --> 33:16.920]  and they're going to be able to sell these mortgages as an investment pool.
[33:16.920 --> 33:20.920]  And when they take these to the depository trust corporation,
[33:20.920 --> 33:26.920]  most likely they will try and get these things with an international CUSIP
[33:26.920 --> 33:28.920]  so they can be marketed overseas.
[33:28.920 --> 33:31.920]  And the only difference between an international CUSIP and a domestic CUPID
[33:31.920 --> 33:35.920]  is there's two additional characters in an international CUSIP.
[33:35.920 --> 33:38.920]  I think it distinguishes the fact that, you know,
[33:38.920 --> 33:41.920]  it's so the DTC can keep track of, you know,
[33:41.920 --> 33:45.920]  where this particular portfolio has been allocated to.
[33:45.920 --> 33:51.920]  It might be Great Britain, United Kingdom, Scotland, France, you know, Germany, China.
[33:51.920 --> 33:55.920]  It could be, you know, but anyhow, the broker,
[33:55.920 --> 33:59.920]  the investment banker puts together this portfolio.
[33:59.920 --> 34:04.920]  He negotiates.
[34:04.920 --> 34:09.920]  Does that mean something?
[34:09.920 --> 34:12.920]  Sounds like somebody's call waiting is kicking in.
[34:12.920 --> 34:13.920]  Hang on just a second.
[34:13.920 --> 34:15.920]  Let me click this ignore button.
[34:15.920 --> 34:18.920]  Okay.
[34:18.920 --> 34:20.920]  Paul's getting another call right now.
[34:20.920 --> 34:25.920]  Just all you listeners, don't push your ignore buttons.
[34:25.920 --> 34:27.920]  All right.
[34:27.920 --> 34:28.920]  I'm sorry.
[34:28.920 --> 34:29.920]  That's okay.
[34:29.920 --> 34:30.920]  Go ahead.
[34:30.920 --> 34:38.920]  What the investment banking company does is it puts together what's called a syndicate.
[34:38.920 --> 34:43.920]  And it might be made up of 15 or 20 or 30 different broker-dealers.
[34:43.920 --> 34:50.920]  And each of these broker-dealers are going to take down a percentage of this overall portfolio.
[34:50.920 --> 34:55.920]  You know, we've got all of Wells Fargo's portfolio that's $500 billion or something of that amount.
[34:55.920 --> 35:03.920]  And they take these, you know, what their broker-dealers selling group is going to be able to market.
[35:03.920 --> 35:06.920]  And it's done just like any initial public offering.
[35:06.920 --> 35:15.920]  You've got 15 or 20 broker-dealers and six or eight, 10,000 commission sales.
[35:15.920 --> 35:25.920]  And word comes out that we've got a seven and three-quarter percent bond with a AA rating or something of that nature.
[35:25.920 --> 35:27.920]  Start talking to your people.
[35:27.920 --> 35:29.920]  Give us some indications of interest.
[35:29.920 --> 35:38.920]  And so pretty soon the brokers are telling them, you know, I'm broker A and I want $100,000 of this or I want $250,000.
[35:38.920 --> 35:40.920]  And they get it sold.
[35:40.920 --> 35:46.920]  It's pre-sold basically before the deal is ever done or for the most part.
[35:46.920 --> 35:52.920]  And then the bank turns around and pools this group of mortgages
[35:52.920 --> 35:59.920]  and sets it over, say, to Shearson Lehman Brothers for, you know, one of a better term.
[35:59.920 --> 36:03.920]  And Shearson is a managing partner of that syndicate.
[36:03.920 --> 36:13.920]  And they release it to Edward D. Jones and to Bashe and Prudential and whoever else, you know, is part of that selling group.
[36:13.920 --> 36:22.920]  But now Wells Fargo has turned around and greatly altered their reserves.
[36:22.920 --> 36:32.920]  So now they can actually go in and get more revenue from the Fed so that they can make more loans.
[36:32.920 --> 36:35.920]  And it's just a never-ending cycle.
[36:35.920 --> 36:37.920]  This is done all the time.
[36:37.920 --> 36:46.920]  And where it's run into the problem is, is that before they were putting more of these subprime tranches into a good public offering,
[36:46.920 --> 36:48.920]  you didn't have the foreclosure problem.
[36:48.920 --> 36:56.920]  People could relatively be assured that, you know, every three or six months they were going to get a check, you know,
[36:56.920 --> 37:02.920]  interest that's being paid on that portfolio, that bond.
[37:02.920 --> 37:05.920]  Now here's the main rub of all this, though.
[37:05.920 --> 37:09.920]  Remember back when we started this, the bank never made any loan to you.
[37:09.920 --> 37:12.920]  So the bank has never had any of their revenue in it.
[37:12.920 --> 37:15.920]  Either the bank themselves are acting as a servicing agent
[37:15.920 --> 37:21.920]  or they've hired somebody to be the servicing agent that's going to service this mortgage for the 30 years that you signed up for it.
[37:21.920 --> 37:33.920]  And they have an interest in that financially because they're getting a portion of that fee every month that you make a payment.
[37:33.920 --> 37:39.920]  That money, a portion of that is, we call it in the business a haircut.
[37:39.920 --> 37:44.920]  It's given a haircut and a portion of that is retained by the bank or the servicing company.
[37:44.920 --> 37:51.920]  The balance of that goes into the register and transfer agent support, which is usually the bank of New York or some big bank up in,
[37:51.920 --> 37:54.920]  you know, near or around Wall Street.
[37:54.920 --> 37:56.920]  It's acting as your register and transfer agent.
[37:56.920 --> 38:07.920]  His job is to keep track of who owns a position in that offering and what percentage of that position is owned by that individual
[38:07.920 --> 38:13.920]  so that when the revenue comes in from the monthly mortgage payments that all these people have been making all over,
[38:13.920 --> 38:19.920]  that register and transfer agent has the ability to credit either to a brokerage account
[38:19.920 --> 38:24.920]  or directly out in the form of a check to somebody that's a bond holder.
[38:24.920 --> 38:30.920]  The bank, having never had any money in the deal, is suddenly back into a position of, you know,
[38:30.920 --> 38:38.920]  a huge amount of new revenue created out of nothing from the Federal Reserve for them to go out and make other types of loans.
[38:38.920 --> 38:42.920]  And the same process occurs over and over and over.
[38:42.920 --> 38:49.920]  And it's these, you know, the banking industry, you know, they used to pay fairly good bonuses.
[38:49.920 --> 38:56.920]  I'm sure you've heard a lot of things on the news about how, you know, AIG, and by the way,
[38:56.920 --> 39:03.920]  I was affiliated with some of the AIG brokerage community for a while, so I'm somewhat familiar with how AIG was structured.
[39:03.920 --> 39:11.920]  But AIG gets this huge amount of revenue in this bailout program that they created by the taxpayers.
[39:11.920 --> 39:16.920]  They ponied up a whole bunch of additional fiat currency,
[39:16.920 --> 39:22.920]  and AIG immediately sent a whole bunch of brokers to some huge resort out in California,
[39:22.920 --> 39:26.920]  and now here they got another loan and they paid out another huge amount.
[39:26.920 --> 39:30.920]  Maryland did the same thing.
[39:30.920 --> 39:40.920]  But all of it is fraud from the get-go because none of these organizations have ever had any consideration in any of these deals.
[39:40.920 --> 39:45.920]  And that's what fiat banking has done for us.
[39:45.920 --> 39:50.920]  Now, Paul, you were saying earlier about, well, I had a couple of questions for you.
[39:50.920 --> 39:56.920]  You were talking about how there's always only one signatory on these notes.
[39:56.920 --> 39:58.920]  I mean, that's pretty common.
[39:58.920 --> 39:59.920]  The bank's never going to sign.
[39:59.920 --> 40:01.920]  It's a unilateral contract.
[40:01.920 --> 40:05.920]  Whoever the, quote, borrower is, is the only signature.
[40:05.920 --> 40:08.920]  And you're saying because of that, it's turned into a securities instrument.
[40:08.920 --> 40:11.920]  Can you address that, how that actually happens,
[40:11.920 --> 40:16.920]  and why if there's only one signature that means it's now a securities instrument?
[40:16.920 --> 40:22.920]  And also you were talking about these derivative funds that are created to offset these notes.
[40:22.920 --> 40:29.920]  And if you could please explain that a little bit more in detail for people who may not understand what derivative funds are.
[40:29.920 --> 40:32.920]  Let me correct briefly what you just said.
[40:32.920 --> 40:38.920]  It is not the fact that these people signed a promissory note that made that into a security.
[40:38.920 --> 40:46.920]  It is a promissory note that once it is bundled and sold to a pool
[40:46.920 --> 40:50.920]  or endorsed over to some other party that it becomes a security.
[40:50.920 --> 40:52.920]  Okay.
[40:52.920 --> 40:56.920]  Are you familiar at all with options or commodity?
[40:56.920 --> 40:58.920]  I mean, do you have, let me talk about that.
[40:58.920 --> 41:01.920]  Commodity is probably the easiest way to explain this.
[41:01.920 --> 41:08.920]  You have a major drought going on here in Texas right now, especially central and south Texas.
[41:08.920 --> 41:16.920]  And all these farmers out here go out and plow their fields in January and February every year
[41:16.920 --> 41:22.920]  because they have to have them plowed in order to participate in crop insurance.
[41:22.920 --> 41:27.920]  And they have to, you know, so they have to do that in order to be eligible for crop insurance.
[41:27.920 --> 41:32.920]  They then go out and purchase their seed and fertilizer and everything is done on the fact that
[41:32.920 --> 41:35.920]  at some point we're going to make a sale of crop and we'll recover.
[41:35.920 --> 41:38.920]  So we'll do this all for the most part on borrowed money.
[41:38.920 --> 41:43.920]  But to ensure the banks that we're not going to create a problem that we can't overcome,
[41:43.920 --> 41:47.920]  we're going to buy crop insurance so that if we have a drought this year,
[41:47.920 --> 41:51.920]  even though we plant the seed and put the fertilizer on it, we get no rain,
[41:51.920 --> 41:55.920]  the crop never germinate and so we don't have a sale at the end of the year.
[41:55.920 --> 41:59.920]  So then the government comes back and says, well, this was insured
[41:59.920 --> 42:06.920]  and we're going to pay down however much money you put into this deal for your seed and your fertilizer.
[42:06.920 --> 42:11.920]  So the banks are whole and for the most part the farmer isn't whole,
[42:11.920 --> 42:16.920]  but he's not in that big a debt because of the crop insurance.
[42:16.920 --> 42:20.920]  Well, the same thing is what a derivative is about or an option.
[42:20.920 --> 42:28.920]  We have puts and calls and when you have, let me give you an example on a stock market.
[42:28.920 --> 42:32.920]  Exxon is a very well-known company and they trade,
[42:32.920 --> 42:37.920]  they've had a range of between $52 and $108 a share.
[42:37.920 --> 42:43.920]  And you go into the market and you buy 100 shares of Exxon for $80.
[42:43.920 --> 42:47.920]  You think that Exxon is going to go up in value.
[42:47.920 --> 42:52.920]  So you immediately turn around and sell a call for $90 a share.
[42:52.920 --> 42:58.920]  So you're giving someone the right to come in and buy that call from you for $90 a share,
[42:58.920 --> 43:01.920]  which gives you a $10 per share profit.
[43:01.920 --> 43:05.920]  And that person buying that call thinks Exxon is going to go up beyond $90,
[43:05.920 --> 43:07.920]  so he's willing to pay you a premium.
[43:07.920 --> 43:11.920]  Let's say he pays you a $6 premium per share.
[43:11.920 --> 43:17.920]  So you get $600 of immediate three-day settlement.
[43:17.920 --> 43:19.920]  You've got $600 in your hand.
[43:19.920 --> 43:25.920]  Now, to protect you in the event Exxon goes against you and goes the wrong way,
[43:25.920 --> 43:33.920]  you then sell what's called a put and you sell, I'm sorry, you buy the put.
[43:33.920 --> 43:39.920]  And you buy the put to put Exxon off on someone else at $75 a share.
[43:39.920 --> 43:44.920]  And it costs you $200 to own that put.
[43:44.920 --> 43:51.920]  You sold the call giving someone else the right to buy your stock for $90 a share.
[43:51.920 --> 43:56.920]  You've got the ability to get out from under it at $75 a share.
[43:56.920 --> 44:00.920]  And you've netted $400 plus whatever dividend, which isn't a big amount,
[44:00.920 --> 44:03.920]  whatever dividend exists in Exxon,
[44:03.920 --> 44:08.920]  and that call will last anywhere from three to six to nine months.
[44:08.920 --> 44:10.920]  That's going to expire.
[44:10.920 --> 44:13.920]  The closer you get to the end of that expiration date,
[44:13.920 --> 44:15.920]  the less value there is in that call.
[44:15.920 --> 44:21.920]  So you can go in and cover, close that position for less than the $600.
[44:21.920 --> 44:26.920]  You would then leave the put just expire worthless.
[44:26.920 --> 44:31.920]  So you ended up making, say, $300 extra this quarter,
[44:31.920 --> 44:33.920]  plus the dividends from Exxon for the quarter,
[44:33.920 --> 44:36.920]  and you still own 100 shares of Exxon.
[44:36.920 --> 44:38.920]  That's what the derivative market is.
[44:38.920 --> 44:41.920]  They're taking a gamble on the puts and the calls,
[44:41.920 --> 44:43.920]  the ups and the downs of the market,
[44:43.920 --> 44:50.920]  and the brokerage houses who take a position in these things are covering their butts.
[44:50.920 --> 44:54.920]  They're increasing the cash flow by the call,
[44:54.920 --> 44:57.920]  and they're diminishing their loss by the put.
[44:57.920 --> 45:00.920]  So they're playing both sides of the fence.
[45:00.920 --> 45:02.920]  The market's either going to go up or down.
[45:02.920 --> 45:05.920]  It's not going to stay static for all that long.
[45:05.920 --> 45:09.920]  And when you're dealing with an oil company such as an Exxon,
[45:09.920 --> 45:13.920]  because of the volatility that took place in a barrel of oil,
[45:13.920 --> 45:18.920]  the price of a barrel of oil, these guys made a lot of money.
[45:18.920 --> 45:21.920]  And so the same thing is going on in the mortgage business.
[45:21.920 --> 45:24.920]  When they put these pools together,
[45:24.920 --> 45:28.920]  they know that a certain percentage of those marketers are going to fail
[45:28.920 --> 45:31.920]  because people are going to lose their jobs or not be able to make the payments.
[45:31.920 --> 45:38.920]  So they're doing things with that type of an instrument to give them the same hedge against loss.
[45:38.920 --> 45:44.920]  They limit their gain, but they capture, you know, they certainly pick their loss.
[45:44.920 --> 45:48.920]  They will never get back less than what that loss has stated to be.
[45:48.920 --> 45:54.920]  So it's just an insurance gain that they're playing in the securities market.
[45:54.920 --> 45:56.920]  I hope I haven't lost you totally.
[45:56.920 --> 45:57.920]  No, no, no, no, of course not.
[45:57.920 --> 46:04.920]  I just wanted you to get into that a little bit deeper for our listeners who may not be familiar, you know, with that whole process.
[46:04.920 --> 46:10.920]  So can you explain a little bit more about how these are bundled together and sold?
[46:10.920 --> 46:14.920]  And so are individual QCID numbers assigned to each mortgage,
[46:14.920 --> 46:20.920]  or are they bundled together with a QCID assigned to a bundle, and how are they bundled?
[46:20.920 --> 46:30.920]  And can someone trace the flow of their individual mortgage, of how it's been securitized and bought and sold on the market?
[46:30.920 --> 46:35.920]  Can someone trace down who has it right now and that sort of thing?
[46:35.920 --> 46:38.920]  It used to be much easier than it is now.
[46:38.920 --> 46:46.920]  With the elimination of the publication of the M1, M2, and M3, they changed the SEC website.
[46:46.920 --> 46:51.920]  It used to be anyone, of course I was involved with it more because I was in the business,
[46:51.920 --> 46:55.920]  but anyone could go to the SEC website.
[46:55.920 --> 47:00.920]  There's a default key in there called EDGAR, E-D-G-A-R.
[47:00.920 --> 47:07.920]  If you knew approximately when you sold or when you signed the paper on your mortgage,
[47:07.920 --> 47:15.920]  believe it or not, these banks, they all fall under the SEC 1933 and 34 acts.
[47:15.920 --> 47:20.920]  And that was because of the emergency or the bank holiday that took place back then,
[47:20.920 --> 47:23.920]  and to instill confidence in the banking industry.
[47:23.920 --> 47:28.920]  There was over 5,000 banks that shut their doors back in 1929,
[47:28.920 --> 47:34.920]  and the people that got money back from those banks didn't see their money back until about 1941, 42,
[47:34.920 --> 47:41.920]  and they got about maybe 30, 35 cents on the dollar, those that were still alive and hung around them.
[47:41.920 --> 47:48.920]  At that same time, there wasn't one life insurance company that lost a dime of anybody's investment.
[47:48.920 --> 47:54.920]  There wasn't one face-amount certificate back in those days that lost a dime of anybody's investment.
[47:54.920 --> 48:00.920]  I think it was 5,039 banks in this country shut their doors in 1929,
[48:00.920 --> 48:07.920]  and people couldn't get their money out of it for 11, 12 years, 13 years.
[48:07.920 --> 48:11.920]  So all these government agencies were put together to instill confidence,
[48:11.920 --> 48:13.920]  to keep confidence in the banking community.
[48:13.920 --> 48:18.920]  And if you go back and read what Roosevelt said and what was said on the floor of Congress at that time,
[48:18.920 --> 48:29.920]  is that they were going to force people indirectly to put their money back into the banks and create this confidence.
[48:29.920 --> 48:32.920]  And that's what occurred.
[48:32.920 --> 48:38.920]  Again, Glass-Steagall was enacted back in those days, so you had some separation between them.
[48:38.920 --> 48:43.920]  In other words, the industries didn't overlap on what any one particular industry could do.
[48:43.920 --> 48:44.920]  Well, that's gone away now.
[48:44.920 --> 48:51.920]  But anyhow, when you get a QCIP number, let me just give you an example.
[48:51.920 --> 49:10.920]  Let's say LaSalle Bank National, a mortgage-backed portfolio as trustee for the trust created in 2003, BJ3.
[49:10.920 --> 49:12.920]  That's one issue.
[49:12.920 --> 49:18.920]  It's a $100 million portfolio that has one QCIP number in it.
[49:18.920 --> 49:21.920]  It probably has 10,000 mortgages in it.
[49:21.920 --> 49:29.920]  That thing is entirely marketed and sold in the United Kingdom.
[49:29.920 --> 49:33.920]  LaSalle Bank was the originating trustee.
[49:33.920 --> 49:38.920]  LaSalle Bank owned that particular instrument for six or seven months.
[49:38.920 --> 49:42.920]  LaSalle then sold that to Lehman Brothers.
[49:42.920 --> 49:46.920]  Lehman Brothers had it for about seven or eight weeks.
[49:46.920 --> 49:50.920]  Lehman Brothers turned around and sold it to the Bank of New York.
[49:50.920 --> 49:53.920]  The Bank of New York owned it about a year.
[49:53.920 --> 49:58.920]  The Bank of New York then sold it to Fairbanks Capital.
[49:58.920 --> 50:05.920]  Fairbanks Capital has just sold it to U.S. Bank out of Minneapolis.
[50:05.920 --> 50:09.920]  So that one portfolio has been traded since 2003.
[50:09.920 --> 50:12.920]  This is, what, 2009?
[50:12.920 --> 50:18.920]  You could keep track of that, but six or seven or eight entities have all owned that instrument.
[50:18.920 --> 50:22.920]  So finding where these things are has become a lot more difficult
[50:22.920 --> 50:26.920]  because of the ability for these banks to trade.
[50:26.920 --> 50:34.920]  But before the M3 disappeared, you could go onto the website of the Security Exchange Commission
[50:34.920 --> 50:39.920]  and go onto the default key, EDGAR, E-D-G-A-R.
[50:39.920 --> 50:43.920]  If you knew approximately when you signed that note, if you knew the name of the company,
[50:43.920 --> 50:48.920]  let's say you did this online, you did it with People's Choice, or you did it with Marvista,
[50:48.920 --> 50:54.920]  use one of these companies that put people looking for mortgage
[50:54.920 --> 50:57.920]  together with companies that are willing to make loans.
[50:57.920 --> 51:02.920]  Use one of them so you have an idea of when you signed the paperwork.
[51:02.920 --> 51:08.920]  You don't know exactly how long the bank would hold it before they sold it the first time.
[51:08.920 --> 51:15.920]  But the Security Exchange Commission requires every security that's traded to be registered.
[51:15.920 --> 51:25.920]  If it has more than 35 investors, if it is in excess of maybe $35 million,
[51:25.920 --> 51:30.920]  and if it's traded outside of one particular state, in other words,
[51:30.920 --> 51:35.920]  if it gets into interstate commerce, they have to register that instrument.
[51:35.920 --> 51:41.920]  So they have to file what's called a 424B, which is a prospectus with the SEC,
[51:41.920 --> 51:49.920]  and they have to file what's called an S3, SAM-3, which is a financing statement, basically.
[51:49.920 --> 51:52.920]  If you know approximately when you signed your note,
[51:52.920 --> 51:58.920]  and you can navigate on the Internet through the SEC website
[51:58.920 --> 52:05.920]  and who you signed your promissory note with, and you put in,
[52:05.920 --> 52:09.920]  say you start about 15 or 20 days before you sign the note,
[52:09.920 --> 52:15.920]  and you go out 90 days beyond the time you signed the note, and you do a search,
[52:15.920 --> 52:20.920]  you might get 20, 25,000 mortgages show up.
[52:20.920 --> 52:22.920]  Your mortgage will be in there somewhere.
[52:22.920 --> 52:28.920]  You just have to go through each one of them page by page until you find it,
[52:28.920 --> 52:31.920]  and that will give you the Q-sub number for it.
[52:31.920 --> 52:35.920]  And once you have that, then you can start, because the register,
[52:35.920 --> 52:39.920]  there's only about five banks that act as register and transfer agents.
[52:39.920 --> 52:47.920]  Bank of New York, Charlotte Bank up in Boston, the, boy,
[52:47.920 --> 52:49.920]  I haven't thought about all the banks that are involved,
[52:49.920 --> 52:52.920]  Chase Manhattan or Morgan Stanley.
[52:52.920 --> 52:56.920]  Those are the banks that are going to end up acting as your register
[52:56.920 --> 52:58.920]  and transfer agent.
[52:58.920 --> 53:02.920]  And all a register and transfer agent is doing is keeping track of where the
[53:02.920 --> 53:06.920]  revenue for that particular security needs to be deposited.
[53:06.920 --> 53:10.920]  You know, if you have a brokerage account, it might be held in, you know,
[53:10.920 --> 53:11.920]  the account would be in street name.
[53:11.920 --> 53:14.920]  If you have it where you take delivery, the security would be in your name,
[53:14.920 --> 53:18.920]  and you'd have an address on the books of the register and transfer agent
[53:18.920 --> 53:20.920]  so that whenever revenue was generated,
[53:20.920 --> 53:23.920]  whatever portion of that revenue you were entitled to,
[53:23.920 --> 53:26.920]  it would be sent to you.
[53:26.920 --> 53:29.920]  When they start selling these things, over and over and over is what makes it,
[53:29.920 --> 53:33.920]  because they divide, they don't sell the whole, they might, you know,
[53:33.920 --> 53:39.920]  they might carve out 40 or 50 percent of the portfolio in the first sale
[53:39.920 --> 53:43.920]  and sell that, you know, illustration to Lehman Brothers.
[53:43.920 --> 53:46.920]  The other 60 percent might have gone to the Bank of New York,
[53:46.920 --> 53:49.920]  and then Lehman Brothers turns around and puts all the end of the bank,
[53:49.920 --> 53:55.920]  you know, so it's, they're constantly being moved.
[53:55.920 --> 53:57.920]  But the CUSIP number stays the same.
[53:57.920 --> 54:02.920]  Once it's registered, that CUSIP number never leaves it.
[54:02.920 --> 54:06.920]  The fact that they have never had anything in the deal, and see,
[54:06.920 --> 54:08.920]  the only thing they record down here, they take,
[54:08.920 --> 54:12.920]  when you sign the promissory note, you also sign a deed of trust,
[54:12.920 --> 54:17.920]  and that's what puts your property and registers the lien on the property
[54:17.920 --> 54:20.920]  with your county recorder.
[54:20.920 --> 54:23.920]  And once that deed of trust is, you know, the loan itself,
[54:23.920 --> 54:28.920]  the promissory note you sent is never, ever recorded.
[54:28.920 --> 54:33.920]  And the reason it's not is so they can continue to market.
[54:33.920 --> 54:37.920]  But the promissory, the deed of trust is recorded.
[54:37.920 --> 54:40.920]  And it's off of that deed of trust that they'll come back on you
[54:40.920 --> 54:45.920]  for the foreclosure.
[54:45.920 --> 54:50.920]  So what we need to do is figure out a way to clear the deed of trust.
[54:50.920 --> 54:53.920]  Quite the title, if that would be what we call it?
[54:53.920 --> 54:57.920]  Quite title, quick title.
[54:57.920 --> 55:04.920]  The, depending on where you happen to be in the procedure,
[55:04.920 --> 55:07.920]  if you're in foreclosure or you're going to foreclosure,
[55:07.920 --> 55:11.920]  you know, you've already had it foreclosed on,
[55:11.920 --> 55:15.920]  the main consideration is to have them, you know,
[55:15.920 --> 55:18.920]  because these things have been carved up like they have,
[55:18.920 --> 55:30.920]  it's almost impossible to get the actual wet ink signature instrument back.
[55:30.920 --> 55:33.920]  Some banks do hold them.
[55:33.920 --> 55:36.920]  There's banks that aren't doing all this stuff.
[55:36.920 --> 55:38.920]  Well, they're solid banks.
[55:38.920 --> 55:39.920]  You make a loan with them,
[55:39.920 --> 55:42.920]  and they actually hold the instrument through the entire course of the loan.
[55:42.920 --> 55:45.920]  And they're acting as their own servicing agent.
[55:45.920 --> 55:51.920]  And when it's paid off, you get the actual instrument back.
[55:51.920 --> 55:56.920]  If you look, if you go over to where your property is recorded at the county,
[55:56.920 --> 56:02.920]  you'll notice that everything is just copies of what you signed.
[56:02.920 --> 56:07.920]  It might be notarized, but the allowance, the real critical portion of it,
[56:07.920 --> 56:10.920]  they never make a picture of the back page of it.
[56:10.920 --> 56:15.920]  So if you ever get to the point where you're asking for discovery
[56:15.920 --> 56:23.920]  or you're asking for admissions, you want the front and back and all the lounges.
[56:23.920 --> 56:27.920]  And if there's a staple hole in that mortgage, you know,
[56:27.920 --> 56:30.920]  in other words, it was stapled because they don't just,
[56:30.920 --> 56:32.920]  they never sign maybe the back of it.
[56:32.920 --> 56:34.920]  It's like a stock power or a bond power.
[56:34.920 --> 56:40.920]  You sign that, you fill out this as pay over to XYZ, and you sign that,
[56:40.920 --> 56:43.920]  and you have what's called a medallion signature guarantee stamp
[56:43.920 --> 56:47.920]  that the brokerage industry uses that guarantees that whoever signed that
[56:47.920 --> 56:49.920]  was entitled and authorized to sign it.
[56:49.920 --> 56:52.920]  So you get a medallion signature guarantee on it,
[56:52.920 --> 56:57.920]  and you staple that allowance to the back of the promissory note.
[56:57.920 --> 57:00.920]  All of a sudden somebody's complaining, I want to see the promissory note
[57:00.920 --> 57:02.920]  and I want to see the front and back of it.
[57:02.920 --> 57:09.920]  They simply pull all those staples, and the lounges that were on it come off.
[57:09.920 --> 57:12.920]  But if you take that instrument and hold it up to the light
[57:12.920 --> 57:16.920]  and you can see a whole bunch of little bitty holes in it where the staples were,
[57:16.920 --> 57:20.920]  that instrument is no longer valid.
[57:20.920 --> 57:22.920]  It's been...
[57:22.920 --> 57:28.920]  That's because there is prima facie evidence that the instrument's not complete.
[57:28.920 --> 57:29.920]  Right.
[57:29.920 --> 57:33.920]  Y'all ever heard of Walker Todd?
[57:33.920 --> 57:36.920]  He worked for the Federal Reserve as an attorney out of Ohio,
[57:36.920 --> 57:39.920]  worked for the Federal Reserve in Cincinnati for a number of years.
[57:39.920 --> 57:44.920]  He's got four or five of his affidavits that are floating around.
[57:44.920 --> 57:51.920]  It is an excellent demonstration of just how the banks have done this.
[57:51.920 --> 57:52.920]  I can't think of it.
[57:52.920 --> 57:59.920]  Clear River, whatever that decision was up in Wisconsin years and years ago.
[57:59.920 --> 58:03.920]  Clear River, Clear Something.
[58:03.920 --> 58:06.920]  I've got the original, you know, one of the archives out of the...
[58:06.920 --> 58:11.920]  I think it's the University of Denver's archives, and I got that out of it.
[58:11.920 --> 58:14.920]  If you can give me the cause number on it, I can find it.
[58:14.920 --> 58:17.920]  Brandy, I can find them for you.
[58:17.920 --> 58:21.920]  I don't have them right here where I can lay my hands on them right now,
[58:21.920 --> 58:22.920]  but I'll get it to you.
[58:22.920 --> 58:26.920]  Listen, we're going to break at the top of the hour here.
[58:26.920 --> 58:29.920]  Paul, can you stay with us for a little while longer?
[58:29.920 --> 58:30.920]  Yes, ma'am.
[58:30.920 --> 58:31.920]  Okay, excellent.
[58:31.920 --> 58:35.920]  All right, we're talking here with Paul in Texas about the mortgage industry
[58:35.920 --> 58:42.920]  and the securitization of notes and the apparent fraud that's being committed.
[58:42.920 --> 58:47.920]  We'll start to take your calls in the next hour, 512-646-1984.
[58:47.920 --> 59:13.920]  We'll be right back.
[59:17.920 --> 59:44.920]  Thank you.
[59:44.920 --> 01:00:04.920]  You are listening to the Rule of Law Radio Network at ruleoflawradio.com,
[01:00:04.920 --> 01:00:28.920]  live free speech talk radio at its best.
[01:00:28.920 --> 01:00:43.920]  Thank you.
[01:00:43.920 --> 01:00:58.920]  Thank you.
[01:00:58.920 --> 01:01:13.920]  Thank you.
[01:01:13.920 --> 01:01:28.920]  Thank you.
[01:01:28.920 --> 01:01:43.920]  Thank you.
[01:01:43.920 --> 01:01:58.920]  Thank you.
[01:01:58.920 --> 01:02:13.920]  Thank you.
[01:02:13.920 --> 01:02:28.920]  Thank you.
[01:02:28.920 --> 01:02:43.920]  Thank you.
[01:02:43.920 --> 01:02:58.920]  Thank you.
[01:02:58.920 --> 01:03:20.920]  Thank you.
[01:03:20.920 --> 01:03:22.920]  Okay, we are back.
[01:03:22.920 --> 01:03:26.920]  The Rule of Law, Randy Kelton, Deborah Stevens, Eddie Craig.
[01:03:26.920 --> 01:03:30.920]  And here with our very special guest, Paul from Texas.
[01:03:30.920 --> 01:03:33.920]  We're going to start taking your calls in a few minutes.
[01:03:33.920 --> 01:03:39.920]  And callers, we request that if you're going to call in right now that you be on topic
[01:03:39.920 --> 01:03:44.920]  about the mortgage industry, questions for our guests regarding abusive numbers
[01:03:44.920 --> 01:03:52.920]  and securitizing these instruments, questions about mortgages or these sorts of things.
[01:03:52.920 --> 01:03:58.920]  So please stay on topic and later in the show we'll go to other issues.
[01:03:58.920 --> 01:04:00.920]  We've got Russ from Texas.
[01:04:00.920 --> 01:04:02.920]  We'll take your call in just a moment.
[01:04:02.920 --> 01:04:06.920]  Randy, you had some questions concerning these mortgages
[01:04:06.920 --> 01:04:10.920]  and doing these forensic analyses of these mortgages and the mistakes,
[01:04:10.920 --> 01:04:13.920]  and what's the motivation here?
[01:04:13.920 --> 01:04:15.920]  So go ahead, Randy.
[01:04:15.920 --> 01:04:24.920]  We're doing the forensic analysis of the loans and we always seem to find a multitude of problems,
[01:04:24.920 --> 01:04:28.920]  a multitude of things that the bank doesn't do right.
[01:04:28.920 --> 01:04:35.920]  And they make errors in doing this, they make errors in what they're charging,
[01:04:35.920 --> 01:04:40.920]  and somehow it always manages to be in the favor of the bank.
[01:04:40.920 --> 01:04:49.920]  I was wondering from this structural standpoint what motivations would be there
[01:04:49.920 --> 01:04:54.920]  that would give the banks reason to ignore the reporting requirements
[01:04:54.920 --> 01:04:59.920]  and the other kinds of requirements in place in making these loans,
[01:04:59.920 --> 01:05:04.920]  because it would seem they would expect that to come back to haunt them, but apparently they don't.
[01:05:04.920 --> 01:05:09.920]  So I'm wondering what motivates them to be so careless.
[01:05:09.920 --> 01:05:16.920]  Isn't that sort of like asking what would motivate a starving man to raid an unattended picnic?
[01:05:16.920 --> 01:05:27.920]  Well, when he raids an unattended picnic that has a security guard with a rifle with a scope on it,
[01:05:27.920 --> 01:05:33.920]  then it would be an appropriate question because, you know, they may not see you every time,
[01:05:33.920 --> 01:05:37.920]  but if they do, you're likely to get nailed.
[01:05:37.920 --> 01:05:44.920]  Ah, but I think the thing is, is this industry is monitored just about like that picnic is, not at all.
[01:05:44.920 --> 01:05:49.920]  Well, yes and no.
[01:05:49.920 --> 01:05:56.920]  To answer your question from my point of view, Randy, would be a two-fold answer.
[01:05:56.920 --> 01:05:59.920]  Greed and ignorance.
[01:05:59.920 --> 01:06:05.920]  Greed on the part of the bank and ignorance on the part of the consumer.
[01:06:05.920 --> 01:06:11.920]  Is the ignorance contributed to by the banks?
[01:06:11.920 --> 01:06:12.920]  Yes.
[01:06:12.920 --> 01:06:17.920]  How much of this is the average guy walking into the bank for the first time to try and secure a loan?
[01:06:17.920 --> 01:06:20.920]  How much of this does he really know?
[01:06:20.920 --> 01:06:27.920]  The banks put people in – you know, the prettiest buildings in town are always your insurance companies or your banks.
[01:06:27.920 --> 01:06:31.920]  Now, why would that be if it wasn't because that's where the money is?
[01:06:31.920 --> 01:06:34.920]  That's why they can be pretty buildings.
[01:06:34.920 --> 01:06:44.920]  Banks have the ability to intimidate people into thinking that they may or may not qualify for what it is that they're there to do.
[01:06:44.920 --> 01:06:48.920]  And we have a problem here, and I'm going to have to look a little deeper into that.
[01:06:48.920 --> 01:06:53.920]  And before you know it, as a consumer, you're sweating whether or not, you know,
[01:06:53.920 --> 01:07:00.920]  you're in there trying to pay a loan to get money to buy a house that your wife wants you to put her in.
[01:07:00.920 --> 01:07:07.920]  You've got the pressure from the domestic side on you, and now you've got a banker that may or may not be interested in making a loan at all.
[01:07:07.920 --> 01:07:13.920]  And so he starts talking to you, but we need to maybe pay attention here or put some points over there.
[01:07:13.920 --> 01:07:19.920]  And if you read the fine print of those loans, once that loan is signed for,
[01:07:19.920 --> 01:07:24.920]  they pretty much have given power of attorney to that bank to do with it as they care to.
[01:07:24.920 --> 01:07:29.920]  The bank, on the other hand, they have what are called loan officers.
[01:07:29.920 --> 01:07:33.920]  They're not the highest paid people from a salary point of view.
[01:07:33.920 --> 01:07:37.920]  But whenever they do these things, it's just like anything else.
[01:07:37.920 --> 01:07:41.920]  You know, if you're an insurance salesman and you're on the million-dollar roundtable,
[01:07:41.920 --> 01:07:47.920]  it means you're earning, you know, so much money a year as a good producer.
[01:07:47.920 --> 01:07:51.920]  And so they offer you trips and they offer you extra, you know,
[01:07:51.920 --> 01:07:59.920]  I got a new Cadillac five years in a row from a company out of Dallas because of the revenue we were generating for them.
[01:07:59.920 --> 01:08:09.920]  But the bank loan officer is working on a set salary of so much, you know, $25,000, $30,000 a year
[01:08:09.920 --> 01:08:15.920]  with the potential of getting some bonusing if he makes good loans.
[01:08:15.920 --> 01:08:22.920]  In other words, if he makes loans that, you know, the people aren't late and the payments are made, you know,
[01:08:22.920 --> 01:08:31.920]  and so he gets a percentage of participation level as a bonus at the end of the year.
[01:08:31.920 --> 01:08:34.920]  So that would be the greed factor in my mind.
[01:08:34.920 --> 01:08:39.920]  And so they can move around inside that paperwork if you don't complain.
[01:08:39.920 --> 01:08:44.920]  And the bank examiner comes along and says, you know, we see a little problem here.
[01:08:44.920 --> 01:08:47.920]  The bank can then say, well, yeah, we understand that.
[01:08:47.920 --> 01:08:49.920]  It was a new loan officer.
[01:08:49.920 --> 01:08:51.920]  He didn't quite understand what he was doing.
[01:08:51.920 --> 01:08:56.920]  But look at here, the history of this loan is the guy has never been more than five days late.
[01:08:56.920 --> 01:08:59.920]  He's always, you know, we've never had a check bounce in him.
[01:08:59.920 --> 01:09:02.920]  It's a good loan.
[01:09:02.920 --> 01:09:05.920]  Bank examiner says, well, all right, I'm going to write you up for this,
[01:09:05.920 --> 01:09:11.920]  but I'm going to put this caveat in there that there's been no complaints by the consumer
[01:09:11.920 --> 01:09:16.920]  and, you know, need to train this guy that made the loan a little better
[01:09:16.920 --> 01:09:19.920]  and don't let it happen again.
[01:09:19.920 --> 01:09:20.920]  Okay.
[01:09:20.920 --> 01:09:24.920]  That raises an interesting issue.
[01:09:24.920 --> 01:09:29.920]  How concerned with the bank examiners is the bank?
[01:09:29.920 --> 01:09:30.920]  I mean, is there some kind of-
[01:09:30.920 --> 01:09:33.920]  The bank is very concerned with it for a couple of reasons.
[01:09:33.920 --> 01:09:44.920]  One, they don't want to lose their charter or they don't want to be fined for stepping way outside the box.
[01:09:44.920 --> 01:09:49.920]  And it only becomes a real problem if all of a sudden they have a number of complaints
[01:09:49.920 --> 01:09:54.920]  or they're going through a period where their reserves fall off the table
[01:09:54.920 --> 01:09:58.920]  and the Fed's having to pump more and more money into them to keep them afloat.
[01:09:58.920 --> 01:10:07.920]  FDIC is possibly going to have to come in here and guarantee each account for $250,000.
[01:10:07.920 --> 01:10:13.920]  Now, the bank pays an insurance premium to participate in FDIC.
[01:10:13.920 --> 01:10:17.920]  But FDIC, let me see if I can explain it this way.
[01:10:17.920 --> 01:10:22.920]  I haven't looked in a while, but demand deposit, the last time I did look,
[01:10:22.920 --> 01:10:28.920]  was something like $77 billion, something in that neighborhood.
[01:10:28.920 --> 01:10:34.920]  Demand deposit is anything you can go and get your hands on the money in 48 hours.
[01:10:34.920 --> 01:10:38.920]  That's the demand deposit.
[01:10:38.920 --> 01:10:45.920]  FDIC insures that for something like $15.5 to $20 billion.
[01:10:45.920 --> 01:10:49.920]  So it's vastly underinsured.
[01:10:49.920 --> 01:10:53.920]  If all the banks fail, FDIC is worthless to you.
[01:10:53.920 --> 01:10:57.920]  They cannot pay what the banks are insured for.
[01:10:57.920 --> 01:11:02.920]  But the FDIC, each account is insured for $250,000.
[01:11:02.920 --> 01:11:04.920]  It was going to drop back to 100 grand.
[01:11:04.920 --> 01:11:11.920]  They extended that now, I think, to 2013.
[01:11:11.920 --> 01:11:14.920]  It's confidence building in the public.
[01:11:14.920 --> 01:11:20.920]  FINRA, which used to be SIPC, Security Investor Protection Corporation,
[01:11:20.920 --> 01:11:28.920]  insured every account with a brokerage that was a member of SIPC to $500,000.
[01:11:28.920 --> 01:11:35.920]  The brokerage houses pay a premium to be part of that insurance pool.
[01:11:35.920 --> 01:11:37.920]  FDIC is the same.
[01:11:37.920 --> 01:11:42.920]  Credit unions have theirs, and the savings loans, FSLICs, they all have them.
[01:11:42.920 --> 01:11:45.920]  But it's nothing more than a confidence builder.
[01:11:45.920 --> 01:11:49.920]  And if you do have some bank failures, the money's there to, you know.
[01:11:49.920 --> 01:11:51.920]  But right now, if you notice, there's, you know,
[01:11:51.920 --> 01:11:55.920]  a huge bank just failed yesterday, Friday, yesterday.
[01:11:55.920 --> 01:11:57.920]  I may have been today in Alabama.
[01:11:57.920 --> 01:12:00.920]  Huge bank.
[01:12:00.920 --> 01:12:05.920]  And FDIC is about wiped clean right now as far as having money
[01:12:05.920 --> 01:12:09.920]  to take care of many more failures.
[01:12:09.920 --> 01:12:12.920]  And we certainly expect more failures.
[01:12:12.920 --> 01:12:16.920]  I certainly do myself.
[01:12:16.920 --> 01:12:25.920]  If I can read just two short paragraphs to you about, you know, how these loans are.
[01:12:25.920 --> 01:12:27.920]  This is, again, out of modern money mechanics.
[01:12:27.920 --> 01:12:29.920]  It says, bank deposited a non-negotiable,
[01:12:29.920 --> 01:12:34.920]  non-legal tender negotiable instrument and exchanged it for another
[01:12:34.920 --> 01:12:39.920]  non-legal tender check, which trades like money,
[01:12:39.920 --> 01:12:43.920]  using the deposited negotiable instrument as the money deposited.
[01:12:43.920 --> 01:12:46.920]  The bank charged the currency without the borrower's authorization,
[01:12:46.920 --> 01:12:50.920]  first by depositing non-legal tender from which to issue a check,
[01:12:50.920 --> 01:12:54.920]  which is a non-legal tender, and using the negotiable instrument,
[01:12:54.920 --> 01:12:58.920]  your mortgage note, to exchange that for legal tender.
[01:12:58.920 --> 01:13:02.920]  The bank needed to make the check appear to be backed by legal tender.
[01:13:02.920 --> 01:13:04.920]  No loan ever took place.
[01:13:04.920 --> 01:13:07.920]  The transaction that took place was merely a change of currency
[01:13:07.920 --> 01:13:10.920]  without authorization, negotiable instrument for a check.
[01:13:10.920 --> 01:13:12.920]  The negotiable instrument is the money,
[01:13:12.920 --> 01:13:16.920]  which can be exchanged for legal tender to make the check good.
[01:13:16.920 --> 01:13:17.920]  And exchange is not a loan.
[01:13:17.920 --> 01:13:21.920]  The bank exchanged $100,000 for $100,000.
[01:13:21.920 --> 01:13:23.920]  There was no need to go to the bank for any money.
[01:13:23.920 --> 01:13:26.920]  The customer, the alleged borrower, did not receive a loan.
[01:13:26.920 --> 01:13:29.920]  The alleged borrower lost $100,000 in value to the bank,
[01:13:29.920 --> 01:13:32.920]  which the bank kept and recorded as a bank asset,
[01:13:32.920 --> 01:13:36.920]  and never loaned any of the bank's money to the consumer.
[01:13:36.920 --> 01:13:38.920]  So they never loaned us anything to begin with,
[01:13:38.920 --> 01:13:41.920]  so why are we paying it back?
[01:13:41.920 --> 01:13:44.920]  It's illegal, because you signed a promissory note,
[01:13:44.920 --> 01:13:47.920]  and they make you think that you still owe them $100,000,
[01:13:47.920 --> 01:13:51.920]  and they amortize it and give you a 30-year amortization schedule
[01:13:51.920 --> 01:13:55.920]  that your payments are $1,800 a month for the next 30 years.
[01:13:55.920 --> 01:13:57.920]  Right, and this is what I've thought for a long time anyway,
[01:13:57.920 --> 01:13:59.920]  and now you're confirming that.
[01:13:59.920 --> 01:14:00.920]  So then what's the remedy?
[01:14:00.920 --> 01:14:02.920]  Is there some way that we can sue these people and say,
[01:14:02.920 --> 01:14:03.920]  look, you never loaned me anything.
[01:14:03.920 --> 01:14:07.920]  I want back all the payments I've ever made.
[01:14:07.920 --> 01:14:12.920]  The remedy is fraud, and you can sue anybody,
[01:14:12.920 --> 01:14:16.920]  but whether you're going to be successful,
[01:14:16.920 --> 01:14:21.920]  because the way the courts are designed and the way the banks are,
[01:14:21.920 --> 01:14:24.920]  I just don't think you're going to find too many courts
[01:14:24.920 --> 01:14:27.920]  are willing to cut their revenue stream off
[01:14:27.920 --> 01:14:31.920]  to do the honorable thing for you.
[01:14:31.920 --> 01:14:35.920]  That's why the country is in such a bad position right now,
[01:14:35.920 --> 01:14:39.920]  is because this cannot go on.
[01:14:39.920 --> 01:14:41.920]  I think the remedy ought to be the same one
[01:14:41.920 --> 01:14:44.920]  Shakespeare came up with to deal with lawyers.
[01:14:44.920 --> 01:14:46.920]  Half of them, yes.
[01:14:46.920 --> 01:14:49.920]  I mean, so basically what you're saying is kind of what I've been thinking
[01:14:49.920 --> 01:14:50.920]  for a long time anyway.
[01:14:50.920 --> 01:14:52.920]  It's an even exchange.
[01:14:52.920 --> 01:14:55.920]  It's what you and I talked about for eight hours.
[01:14:55.920 --> 01:14:57.920]  No, ma'am, it's not an even exchange.
[01:14:57.920 --> 01:15:00.920]  It cost you $100,000.
[01:15:00.920 --> 01:15:03.920]  Well, I'm saying at the beginning,
[01:15:03.920 --> 01:15:09.920]  before I would have ever paid back anything that I never borrowed to begin with,
[01:15:09.920 --> 01:15:10.920]  it's a one-for-one.
[01:15:10.920 --> 01:15:16.920]  There's no reason to pay anything back.
[01:15:16.920 --> 01:15:17.920]  Well, that's true.
[01:15:17.920 --> 01:15:22.920]  Where they draw it from the Treasury, what connection does that have
[01:15:22.920 --> 01:15:28.920]  with our Treasury accounts that people talk about?
[01:15:28.920 --> 01:15:30.920]  I'm sorry, I didn't hear the first part of your question.
[01:15:30.920 --> 01:15:32.920]  Yeah, you're kind of cutting out, Randy.
[01:15:32.920 --> 01:15:33.920]  Okay.
[01:15:33.920 --> 01:15:39.920]  I hear people talking about when I issue the promissory note,
[01:15:39.920 --> 01:15:44.920]  the bank goes and pulls that from the Treasury,
[01:15:44.920 --> 01:15:51.920]  and they're saying they pull it from an account that's created on my birth certificate.
[01:15:51.920 --> 01:15:53.920]  Do you know anything about that?
[01:15:53.920 --> 01:15:57.920]  Well, I know that you have an account that was created through your birth certificate,
[01:15:57.920 --> 01:16:05.920]  but that birth certificate probably didn't enter into this transaction
[01:16:05.920 --> 01:16:06.920]  that we're talking about at all tonight.
[01:16:06.920 --> 01:16:10.920]  The birth certificate is what they have been pledging for.
[01:16:10.920 --> 01:16:16.920]  I'm not convinced, Randy, that they still aren't using birth certificates
[01:16:16.920 --> 01:16:19.920]  of people who have been dead for 30 or 40 years,
[01:16:19.920 --> 01:16:23.920]  but they're still using their accounts to continue to make money with.
[01:16:23.920 --> 01:16:29.920]  But when you first are at a live birth,
[01:16:29.920 --> 01:16:31.920]  and today you can't hardly get out of a hospital
[01:16:31.920 --> 01:16:37.920]  without the birth certificate being filled out and signed by your mother.
[01:16:37.920 --> 01:16:42.920]  Years ago it wasn't quite that, I mean, you could get out of the hospital,
[01:16:42.920 --> 01:16:49.920]  but these birth certificates go first to the county or the city that you're born in,
[01:16:49.920 --> 01:16:52.920]  and then they go to the state of your birth,
[01:16:52.920 --> 01:16:58.920]  and then they end up with, I think it's the Department of Commerce in D.C.,
[01:16:58.920 --> 01:17:04.920]  and that's what has been pledged as your particular part of the energy
[01:17:04.920 --> 01:17:10.920]  and this whole great big engine that they're operating from coast to coast,
[01:17:10.920 --> 01:17:12.920]  and they create a value.
[01:17:12.920 --> 01:17:18.920]  I've heard anything from $650,000 to a couple of million dollars
[01:17:18.920 --> 01:17:21.920]  is what that thing starts out at.
[01:17:21.920 --> 01:17:26.920]  But that instrument that they collected at the Department of Commerce
[01:17:26.920 --> 01:17:30.920]  is what they pledged to the Federal Reserve Banks
[01:17:30.920 --> 01:17:33.920]  in order to allow the Federal Reserve Bank to print money.
[01:17:33.920 --> 01:17:38.920]  And each instrument that they print, whether it's a $1 bill or a $1,000 bill,
[01:17:38.920 --> 01:17:40.920]  costs them the same amount to print.
[01:17:40.920 --> 01:17:41.920]  That doesn't change.
[01:17:41.920 --> 01:17:46.920]  It's a couple of cents of a bill.
[01:17:46.920 --> 01:17:49.920]  The Congress has what's called a debt ceiling,
[01:17:49.920 --> 01:17:52.920]  and they continually have to raise it,
[01:17:52.920 --> 01:17:56.920]  and they're talking about having to raise it again in the next four to six weeks
[01:17:56.920 --> 01:17:58.920]  because they've about run out of money again.
[01:17:58.920 --> 01:18:03.920]  The Congress raises the value or the limit of the debt ceiling.
[01:18:03.920 --> 01:18:08.920]  They send somebody down to the Federal Reserve, maybe the Treasurer.
[01:18:08.920 --> 01:18:12.920]  The Treasurer in this country is the trustee of our bankruptcy,
[01:18:12.920 --> 01:18:15.920]  but they go down to the Federal Reserve and says,
[01:18:15.920 --> 01:18:20.920]  the Congress has authorized us to increase the debt ceiling to this amount,
[01:18:20.920 --> 01:18:25.920]  and we need you to print this much new currency.
[01:18:25.920 --> 01:18:31.920]  The Treasury then creates some type of a note or a bond,
[01:18:31.920 --> 01:18:36.920]  a Treasury note or a Treasury bond or a government-issued bond,
[01:18:36.920 --> 01:18:40.920]  and they exchange that bond for this new revenue
[01:18:40.920 --> 01:18:44.920]  that the Federal Reserve Bank prints out for them.
[01:18:44.920 --> 01:18:48.920]  The Federal Reserve takes this money and disperses it
[01:18:48.920 --> 01:18:54.920]  based on the region of the country that you're in to the 13 branches of the Federal Reserve.
[01:18:54.920 --> 01:19:00.920]  All those branches then distribute that down through their corresponding banks.
[01:19:00.920 --> 01:19:03.920]  When you go and make a loan today,
[01:19:03.920 --> 01:19:07.920]  I don't know that your birth certificate actually comes into it.
[01:19:07.920 --> 01:19:11.920]  I think your promissory note that you sign in that banker's office
[01:19:11.920 --> 01:19:16.920]  is the energy that you're using to create the capital.
[01:19:16.920 --> 01:19:19.920]  They, in turn, just like I read to you, they take that,
[01:19:19.920 --> 01:19:26.920]  which is not a legal transaction, and they make it a legal transaction
[01:19:26.920 --> 01:19:30.920]  because they use that negotiable instrument to redeposit with the Fed
[01:19:30.920 --> 01:19:37.920]  so that the bank is now credited on their asset and their balance sheet with $100,000.
[01:19:37.920 --> 01:19:41.920]  You walked out thinking, well, I just made a $100,000 loan,
[01:19:41.920 --> 01:19:43.920]  and I'm going to go over here and give it to this builder
[01:19:43.920 --> 01:19:47.920]  who just built this $100,000 house for me.
[01:19:47.920 --> 01:19:53.920]  And the builder is going to be happy, and I'm going to have 30 years' worth of payments.
[01:19:53.920 --> 01:19:57.920]  Now, what the builder does with a $100,000 check is he immediately runs to his bank.
[01:19:57.920 --> 01:20:00.920]  If it's the same bank you're dealing with,
[01:20:00.920 --> 01:20:05.920]  that bank just made another $100,000 when that builder deposits your check,
[01:20:05.920 --> 01:20:08.920]  which may just be their check endorsed over to him.
[01:20:08.920 --> 01:20:13.920]  If he deals with another bank down the street that's a different branch of a different company,
[01:20:13.920 --> 01:20:17.920]  that bank just got a windfall of $100,000.
[01:20:17.920 --> 01:20:23.920]  On their balance sheet, they have an asset now that has increased by $100,000.
[01:20:23.920 --> 01:20:29.920]  And the offsetting debit is what they put in your checking account
[01:20:29.920 --> 01:20:34.920]  or that person's checking account as a corresponding deposit.
[01:20:34.920 --> 01:20:37.920]  But it's not real money.
[01:20:37.920 --> 01:20:40.920]  It just looks like real money.
[01:20:40.920 --> 01:20:43.920]  Real money is the promissory note.
[01:20:43.920 --> 01:20:45.920]  But they all do it,
[01:20:45.920 --> 01:20:51.920]  and they continually monetize this to the point that we're in trillions
[01:20:51.920 --> 01:20:55.920]  and trillions of dollars in the hole.
[01:20:55.920 --> 01:20:57.920]  Yes, and listening to your talk about it,
[01:20:57.920 --> 01:21:02.920]  it sounds like it would reach a point to where it would grow exponentially.
[01:21:02.920 --> 01:21:04.920]  We're at that point, in my opinion.
[01:21:04.920 --> 01:21:06.920]  There hasn't been, I think I've said this already,
[01:21:06.920 --> 01:21:10.920]  a fiat currency that survived much more than 100 years.
[01:21:10.920 --> 01:21:12.920]  Yeah, Dr. Heath talks about that as well.
[01:21:12.920 --> 01:21:16.920]  Has anybody explained on any of your calls what a million dollars is
[01:21:16.920 --> 01:21:20.920]  and what a trillion dollars is?
[01:21:20.920 --> 01:21:28.920]  If you have a million dollars in your possession and your wife is a big shopper,
[01:21:28.920 --> 01:21:32.920]  you can let her spend $1,000 a day for the next almost three years
[01:21:32.920 --> 01:21:35.920]  before she goes through that million dollars.
[01:21:35.920 --> 01:21:38.920]  If you have a trillion dollars in your account,
[01:21:38.920 --> 01:21:42.920]  you can go back to the year that Jesus died on the cross,
[01:21:42.920 --> 01:21:45.920]  and you can count every year that's gone by since then,
[01:21:45.920 --> 01:21:48.920]  and you get to this year, 2009,
[01:21:48.920 --> 01:21:57.920]  you still have 760 years to go before you run out of one trillion dollars.
[01:21:57.920 --> 01:22:00.920]  And we're in depth to the tune of 12, 14, 16 trillion.
[01:22:00.920 --> 01:22:02.920]  That's what they show on the books.
[01:22:02.920 --> 01:22:05.920]  That doesn't include all the off-balance, off-books,
[01:22:05.920 --> 01:22:10.920]  all the payments to all the welfare and the Medicaid, Medicare,
[01:22:10.920 --> 01:22:14.920]  all this other stuff, all that's done off-book.
[01:22:14.920 --> 01:22:17.920]  So who knows what our debt is, but it's stagnant.
[01:22:17.920 --> 01:22:19.920]  We'll never get out of it, ever.
[01:22:19.920 --> 01:22:22.920]  The only way they're going to get out of it is either to value the dollar
[01:22:22.920 --> 01:22:25.920]  or shift to a different currency.
[01:22:25.920 --> 01:22:28.920]  Yeah, I'm hearing rumblings about that,
[01:22:28.920 --> 01:22:33.920]  but I've been hearing rumblings about it for a long time.
[01:22:33.920 --> 01:22:35.920]  So are you ready to take some calls?
[01:22:35.920 --> 01:22:36.920]  I can try.
[01:22:36.920 --> 01:22:39.920]  All right, let's go to Russell in Texas.
[01:22:39.920 --> 01:22:40.920]  Hey, Russell, thanks for calling in.
[01:22:40.920 --> 01:22:42.920]  What is your question for our guest?
[01:22:42.920 --> 01:22:43.920]  Hey, what's going on?
[01:22:43.920 --> 01:22:44.920]  A lot.
[01:22:44.920 --> 01:22:48.920]  Well, considering Mr. Paul is a good friend of mine,
[01:22:48.920 --> 01:22:51.920]  I think that I'd take his brain a little bit.
[01:22:51.920 --> 01:22:52.920]  Would you please tell me?
[01:22:52.920 --> 01:22:54.920]  Here we go.
[01:22:54.920 --> 01:22:58.920]  Would you please tell me, I go to Fidelity.com,
[01:22:58.920 --> 01:23:02.920]  and I put in my loan number, and I find a CUSIP number,
[01:23:02.920 --> 01:23:07.920]  and I find a corresponding bond, and that bond is worth $11 million.
[01:23:07.920 --> 01:23:09.920]  I mean, I'm rich, right?
[01:23:09.920 --> 01:23:13.920]  No, unfortunately you're not.
[01:23:13.920 --> 01:23:17.920]  That's a portfolio of a mutual fund with Fidelity.
[01:23:17.920 --> 01:23:22.920]  Fidelity, I'm not denying, Fidelity probably trades in bonds.
[01:23:22.920 --> 01:23:26.920]  But what Fidelity, what I think of the website you're talking about
[01:23:26.920 --> 01:23:28.920]  is one I'm familiar with.
[01:23:28.920 --> 01:23:36.920]  Fidelity created that website in order to have an accessible entry
[01:23:36.920 --> 01:23:39.920]  for the broker-dealer community who had clients.
[01:23:39.920 --> 01:23:41.920]  You know, I haven't counted them up,
[01:23:41.920 --> 01:23:46.920]  but to last I looked at over 2,000 fund families, or funds.
[01:23:46.920 --> 01:23:48.920]  We have multiple families.
[01:23:48.920 --> 01:23:49.920]  They're traded worldwide.
[01:23:49.920 --> 01:23:54.920]  They're traded on every major exchange in the world.
[01:23:54.920 --> 01:23:57.920]  They have what they call the Pacific Rim family,
[01:23:57.920 --> 01:24:01.920]  and they have the Eastern Europe family.
[01:24:01.920 --> 01:24:07.920]  Fidelity is a very large, very well-run fund or mutual fund family.
[01:24:07.920 --> 01:24:16.920]  But they created a website to allow brokers to, you know, who have, you know,
[01:24:16.920 --> 01:24:22.920]  I dealt for years with what were called ESOP funds, Employee Stock Option Plans,
[01:24:22.920 --> 01:24:29.920]  and I dealt with deferred compensation plans through the 403B portfolios,
[01:24:29.920 --> 01:24:33.920]  which is an IRS designation for hospitals and school teachers
[01:24:33.920 --> 01:24:35.920]  and college professors.
[01:24:35.920 --> 01:24:39.920]  But definitely you have to qualify to be able to sell that type of product
[01:24:39.920 --> 01:24:40.920]  as a fund family.
[01:24:40.920 --> 01:24:45.920]  And the state legislature here in Texas has five funds that you can use,
[01:24:45.920 --> 01:24:47.920]  Pioneer Fund, Fidelity.
[01:24:47.920 --> 01:24:50.920]  I can't remember all of them now, but anyway,
[01:24:50.920 --> 01:24:54.920]  when you have a huge block of business in Fidelity
[01:24:54.920 --> 01:24:56.920]  and you're doing what is called market timing,
[01:24:56.920 --> 01:25:00.920]  you're trying to time the market to keep your people fully invested
[01:25:00.920 --> 01:25:04.920]  when the market is going positively and going with you,
[01:25:04.920 --> 01:25:09.920]  and you want to get out of that market when it starts to turn against you,
[01:25:09.920 --> 01:25:14.920]  you don't want to have to go and trade every individual account
[01:25:14.920 --> 01:25:18.920]  that's in, say, Magellan Fund with Fidelity.
[01:25:18.920 --> 01:25:23.920]  You go to this website and you put in the fund number
[01:25:23.920 --> 01:25:27.920]  that they've assigned to Magellan, and it could be, I think it's 06.
[01:25:27.920 --> 01:25:28.920]  I could be wrong.
[01:25:28.920 --> 01:25:31.920]  It's been a while, but you can put in all kinds of numbers,
[01:25:31.920 --> 01:25:36.920]  but as soon as that computer sees the 06 show up, it says,
[01:25:36.920 --> 01:25:41.920]  aha, Magellan Fund, and you immediately go to Magellan Fund,
[01:25:41.920 --> 01:25:44.920]  and you have the ability once you're there,
[01:25:44.920 --> 01:25:48.920]  if you have the right authorization code that Fidelity has assigned you
[01:25:48.920 --> 01:25:54.920]  as a registered broker-dealer, or broker with a registered broker-dealer,
[01:25:54.920 --> 01:25:59.920]  you put in your number and you put in a sell signal for every account
[01:25:59.920 --> 01:26:02.920]  that you have in that family, in that fund,
[01:26:02.920 --> 01:26:07.920]  and that trade takes place before the close of business that day.
[01:26:07.920 --> 01:26:12.920]  And that is what that Fidelity window is.
[01:26:12.920 --> 01:26:16.920]  You can see the top 10 holdings that they have in the portfolio.
[01:26:16.920 --> 01:26:19.920]  You can get yesterday's net asset value closed.
[01:26:19.920 --> 01:26:21.920]  You can get the price-earnings ratio.
[01:26:21.920 --> 01:26:28.920]  You can get the top 10 percent and what each position is
[01:26:28.920 --> 01:26:32.920]  and a breakdown as to what their charts and graphs look like
[01:26:32.920 --> 01:26:37.920]  as the percentage of their position in the whole fund.
[01:26:37.920 --> 01:26:45.920]  You can get charts and trend lines and any insider trading that's taken from them.
[01:26:45.920 --> 01:26:49.920]  Insider trading is legal as long as you let them know that you're doing it
[01:26:49.920 --> 01:26:55.920]  and you do it where you're not doing it at somebody else's expense.
[01:26:55.920 --> 01:27:01.920]  But that's what that portfolio was designed, that website was designed to do.
[01:27:01.920 --> 01:27:04.920]  I just wanted you to explain that because I'm getting so tired of these gurus
[01:27:04.920 --> 01:27:08.920]  around the United States preaching that you can go in there
[01:27:08.920 --> 01:27:12.920]  and type in your birth certificate number and find your birth certificate bond.
[01:27:12.920 --> 01:27:16.920]  You can type in your Social Security number and you can find your Social Security bond.
[01:27:16.920 --> 01:27:24.920]  Well, let me suggest, the other thing you can do on that website is you can order perspectives to...
[01:27:24.920 --> 01:27:29.920]  Paul?
[01:27:29.920 --> 01:27:32.920]  Do we still have Paul?
[01:27:32.920 --> 01:27:34.920]  I don't hear him.
[01:27:34.920 --> 01:27:40.920]  He'll call back.
[01:27:40.920 --> 01:27:43.920]  You paid him in a corner, Russell, and he jumped off the line.
[01:27:43.920 --> 01:27:45.920]  See what you did, Russell?
[01:27:45.920 --> 01:27:48.920]  Russell, you run off our guest.
[01:27:48.920 --> 01:27:52.920]  He already knew I was calling.
[01:27:52.920 --> 01:27:55.920]  Well, while we're waiting for Paul's call back.
[01:27:55.920 --> 01:27:59.920]  The credit river decision, what he was talking about earlier,
[01:27:59.920 --> 01:28:06.920]  where that judge ruled that the Federal Reserve notes are unconstitutional.
[01:28:06.920 --> 01:28:11.920]  And Randy, I don't think you're going to fight him on the Lexus-Nexus either.
[01:28:11.920 --> 01:28:13.920]  I certainly doubt it.
[01:28:13.920 --> 01:28:17.920]  Do you have the case number?
[01:28:17.920 --> 01:28:19.920]  No, but I've got the case somewhere.
[01:28:19.920 --> 01:28:24.920]  I mean, there's somebody that had to go in and look it up before it ever got taken out of public record
[01:28:24.920 --> 01:28:27.920]  and they had to save it that way.
[01:28:27.920 --> 01:28:31.920]  I wonder if he was willing to admit that his own job is unconstitutional.
[01:28:31.920 --> 01:28:35.920]  No.
[01:28:35.920 --> 01:28:42.920]  Oh, Randy, I sent out an email today that I wrote a response to a gentleman about the social contract
[01:28:42.920 --> 01:28:47.920]  and so on and so forth that I think you might find interesting reading.
[01:28:47.920 --> 01:28:50.920]  It's not very long, but it makes some very interesting points
[01:28:50.920 --> 01:28:56.920]  that deals with how things are set up and how they're supposed to work.
[01:28:56.920 --> 01:29:01.920]  Okay, well, while we're waiting for Paul to call back in, why don't we take another caller?
[01:29:01.920 --> 01:29:04.920]  We've got Dan down here.
[01:29:04.920 --> 01:29:07.920]  Yeah, actually, we're about to go to break anyway.
[01:29:07.920 --> 01:29:12.920]  We've got Dan and John, and I know for sure John has a question for the guests,
[01:29:12.920 --> 01:29:15.920]  and it looks like we have Paul that's called back in.
[01:29:15.920 --> 01:29:16.920]  Paul, are you there?
[01:29:16.920 --> 01:29:17.920]  Yeah, I'm here.
[01:29:17.920 --> 01:29:20.920]  I guess I've knocked off.
[01:29:20.920 --> 01:29:25.920]  We accused Russell of running you off.
[01:29:25.920 --> 01:29:28.920]  He's been trying that for years.
[01:29:28.920 --> 01:29:31.920]  Okay, well, listen, we're about to go to break, and when we come back on the other side,
[01:29:31.920 --> 01:29:36.920]  I want Paul to finish what he was saying, addressing this situation with Fidelity.com,
[01:29:36.920 --> 01:29:39.920]  and then we'll start moving on to other callers.
[01:29:39.920 --> 01:29:43.920]  You're listening to The Rule of Law, Randy Kelton, Deborah Stevens, Eddie Craig,
[01:29:43.920 --> 01:29:57.920]  our special guest Paul from Texas. We'll be right back.
[01:29:57.920 --> 01:30:02.920]  Gold prices are at historic highs, and with the recent pullback, this is a great time to buy.
[01:30:02.920 --> 01:30:06.920]  With the value of the dollar, risks of inflation, geopolitical uncertainties
[01:30:06.920 --> 01:30:10.920]  and instability in rural financial systems, I see gold going up much higher.
[01:30:10.920 --> 01:30:13.920]  Hi, I'm Tim Fry at Roberts & Roberts Brokerage.
[01:30:13.920 --> 01:30:17.920]  Everybody should have some of their assets in investment-grade precious metals.
[01:30:17.920 --> 01:30:21.920]  At Roberts & Roberts Brokerage, you can buy gold, silver and platinum with confidence
[01:30:21.920 --> 01:30:26.920]  from a brokerage that's specialized in the precious metals market since 1977.
[01:30:26.920 --> 01:30:30.920]  If you are new to precious metals, we will happily provide you with the information
[01:30:30.920 --> 01:30:34.920]  you need to make an informed decision, whether or not you choose to purchase from us.
[01:30:34.920 --> 01:30:39.920]  Also, Roberts & Roberts Brokerage values your privacy and will always advise you
[01:30:39.920 --> 01:30:42.920]  in the event that we would be required to report any transaction.
[01:30:42.920 --> 01:30:47.920]  If you have gold, silver or platinum you'd like to sell, we can convert it for immediate payment.
[01:30:47.920 --> 01:31:10.920]  Call us at 800-874-9760. We're Roberts & Roberts Brokerage, 800-874-9760.
[01:31:17.920 --> 01:31:33.920]  Stop, what's that sound? Everybody look what's going down.
[01:31:47.920 --> 01:32:08.920]  Stop, what's that sound? Everybody look what's going down.
[01:32:17.920 --> 01:32:30.920]  Okay, we are back. Rule of Law, Raina Kelton, Deborah Stevens, Eddie Craig.
[01:32:30.920 --> 01:32:38.920]  We're here with Paul discussing the bundling of notes and selling them on the open market,
[01:32:38.920 --> 01:32:43.920]  the QCID numbers, how it's much more difficult to track these days than it used to be,
[01:32:43.920 --> 01:32:48.920]  how the mortgage system really works, the fiat currency system, the whole nine yards.
[01:32:48.920 --> 01:32:50.920]  We're speaking with Russell in Texas.
[01:32:50.920 --> 01:32:55.920]  And Paul, right before you dropped off, you were about to address the issue concerning
[01:32:55.920 --> 01:33:01.920]  looking up birth certificate numbers and Social Security numbers and such on thisfidelity.com,
[01:33:01.920 --> 01:33:07.920]  which is somewhat of a rabbit trail and appears to not be true.
[01:33:07.920 --> 01:33:14.920]  Well, what you can also do on that website of theirs is you can download the current perspectives
[01:33:14.920 --> 01:33:18.920]  and look at it and it will show every holding that Fidelity has.
[01:33:18.920 --> 01:33:25.920]  And you can go through there and see what the stock portfolio is and a breakdown of each carrier
[01:33:25.920 --> 01:33:31.920]  or company that's in the stock portfolio as well as the bond portfolio.
[01:33:31.920 --> 01:33:38.920]  But you're not going to find any individual QCIP numbers or birth certificates being held
[01:33:38.920 --> 01:33:41.920]  inside of Fidelity's portfolios.
[01:33:41.920 --> 01:33:43.920]  They just don't do it.
[01:33:43.920 --> 01:33:49.920]  So what's happening, people go to that website and they type in a whole lot of numbers or just a couple.
[01:33:49.920 --> 01:33:54.920]  The computers, the way they program that thing, set it up was to,
[01:33:54.920 --> 01:34:00.920]  once it sees a string of numbers put together that equates to one of their fund families,
[01:34:00.920 --> 01:34:06.920]  that's where you're going to be taken to.
[01:34:06.920 --> 01:34:12.920]  So like if the first five numbers match and it's expecting to see five numbers
[01:34:12.920 --> 01:34:18.920]  and you put in eight or nine, it's just going to ignore the rest of them, isn't it?
[01:34:18.920 --> 01:34:19.920]  That's right.
[01:34:19.920 --> 01:34:23.920]  It's going to take you to the first five numbers or four numbers or anything.
[01:34:23.920 --> 01:34:27.920]  If you keep typing and you go beyond, you know,
[01:34:27.920 --> 01:34:33.920]  there's another portfolio listed beyond the ones you put in, it'll take you to that one.
[01:34:33.920 --> 01:34:38.920]  But once your sequence ends and you go down with a number lower than, you know,
[01:34:38.920 --> 01:34:44.920]  it's a biennial progression type deal, you know.
[01:34:44.920 --> 01:34:48.920]  They don't number their funds 3-2-1.
[01:34:48.920 --> 01:34:51.920]  It's 1-2-3.
[01:34:51.920 --> 01:34:55.920]  And once you get the numbers that are entered into their system,
[01:34:55.920 --> 01:34:59.920]  that the next number is lower than the last number you put in,
[01:34:59.920 --> 01:35:03.920]  they're going to take you to that fund family that's closest to,
[01:35:03.920 --> 01:35:06.920]  and everybody says, oh, there's where my bond is.
[01:35:06.920 --> 01:35:11.920]  Well, it might be there, but that's not the method you're going to use to find it.
[01:35:11.920 --> 01:35:20.920]  I doubt that it's there because I think most of those things are put together in,
[01:35:20.920 --> 01:35:25.920]  of course, you get into open-end funds, which most mutual funds are in closed-end funds.
[01:35:25.920 --> 01:35:31.920]  And I'm suggesting a lot of these bonds are being placed in closed-end funds.
[01:35:31.920 --> 01:35:38.920]  They're not that readily tradable to the general public.
[01:35:38.920 --> 01:35:41.920]  Paul, you were talking earlier about LaSalle Natural Bank
[01:35:41.920 --> 01:35:46.920]  and selling to a different one and then them selling to a different one.
[01:35:46.920 --> 01:35:50.920]  You know, the public out there knows how much of an expert you are,
[01:35:50.920 --> 01:35:52.920]  but tell them whose loan that was for.
[01:35:52.920 --> 01:35:54.920]  No, I'd rather not.
[01:35:54.920 --> 01:35:57.920]  Oh, okay. Well, that's up to you.
[01:35:57.920 --> 01:36:01.920]  That was my loan.
[01:36:01.920 --> 01:36:02.920]  That was your loan.
[01:36:02.920 --> 01:36:04.920]  That was my loan.
[01:36:04.920 --> 01:36:07.920]  And unfortunately, even though you're the expert that you are,
[01:36:07.920 --> 01:36:10.920]  it didn't matter a hill of beans to a court of law, did it?
[01:36:10.920 --> 01:36:16.920]  Well, that's still working its way through the system.
[01:36:16.920 --> 01:36:17.920]  That's true.
[01:36:17.920 --> 01:36:20.920]  But it mattered to a bunch of them until I got to one particular judge,
[01:36:20.920 --> 01:36:22.920]  and it didn't matter at all.
[01:36:22.920 --> 01:36:25.920]  Right.
[01:36:25.920 --> 01:36:31.920]  Also, on my mortgage, on my mobile home, it doesn't say anything about a loan.
[01:36:31.920 --> 01:36:36.920]  It says they extended credit.
[01:36:36.920 --> 01:36:41.920]  Now, you know, that seems a little bit different than a loan.
[01:36:41.920 --> 01:36:43.920]  I mean, when they extended credit,
[01:36:43.920 --> 01:36:50.920]  then all they did was give me a transfer of digits on account somewhere, right?
[01:36:50.920 --> 01:36:54.920]  They gave you a promise and that's all.
[01:36:54.920 --> 01:36:58.920]  But yet the entire time I was filling out applications for a loan
[01:36:58.920 --> 01:37:00.920]  and I'm getting things back and forth saying,
[01:37:00.920 --> 01:37:07.920]  now we want $16,000 down instead of $12,000 and all that stuff for a supposed loan.
[01:37:07.920 --> 01:37:10.920]  And then when I go in to sign the paperwork and stuff,
[01:37:10.920 --> 01:37:15.920]  when you look at it, it's not a loan, it's extension of credit.
[01:37:15.920 --> 01:37:17.920]  So that's another way they get around this.
[01:37:17.920 --> 01:37:21.920]  The reason they have to do that, Russell, is because the banks can't make a loan.
[01:37:21.920 --> 01:37:23.920]  It's illegal for a bank to make a loan.
[01:37:23.920 --> 01:37:25.920]  Right.
[01:37:25.920 --> 01:37:31.920]  And the other thing, when we're doing the promissory note in the UCC,
[01:37:31.920 --> 01:37:35.920]  a promissory note cannot be more than nine months.
[01:37:35.920 --> 01:37:40.920]  That's why the mortgage turns into a security because it's more than nine months.
[01:37:40.920 --> 01:37:42.920]  Well, that's true also.
[01:37:42.920 --> 01:37:46.920]  Well, you might be the perfect gentleman to ask this question to then.
[01:37:46.920 --> 01:37:52.920]  Would you have any idea what the federal statutes are that prevent a bank
[01:37:52.920 --> 01:37:59.920]  from releasing funds without approval of the account holder?
[01:37:59.920 --> 01:38:03.920]  Well, it depends on who they're releasing the funds to
[01:38:03.920 --> 01:38:08.920]  would determine how I would answer that if it's a particular alphabet soup agency.
[01:38:08.920 --> 01:38:13.920]  They're more fearful of them than they are of you.
[01:38:13.920 --> 01:38:16.920]  Granted, but somewhere there's got to be a law that protects the depositor
[01:38:16.920 --> 01:38:20.920]  from having their funds extracted from their account without their approval,
[01:38:20.920 --> 01:38:26.920]  even if it is by an alphabet agency when they're acting without warrant or court order.
[01:38:26.920 --> 01:38:31.920]  I would suggest that you look into a UCC 11.
[01:38:31.920 --> 01:38:33.920]  That's what I was going to say.
[01:38:33.920 --> 01:38:40.920]  See if the lien was ever perfected, which it won't be,
[01:38:40.920 --> 01:38:49.920]  and get a copy of that from the Secretary of State, and I would go back to your bank.
[01:38:49.920 --> 01:38:53.920]  There's been some banks that have lost quite a bit of money because of that very thing.
[01:38:53.920 --> 01:38:57.920]  They've taken money without authorization.
[01:38:57.920 --> 01:39:01.920]  But the other side of this, and it gets into how much the bank is willing to release
[01:39:01.920 --> 01:39:09.920]  and allow you to become aware of, is that that's a demand deposit account that you've got with them,
[01:39:09.920 --> 01:39:17.920]  and they've got a totally other set of books behind the scenes that you're not going to look at.
[01:39:17.920 --> 01:39:24.920]  Even though they've given money away, they'll do their best to try and convince you that they were acting,
[01:39:24.920 --> 01:39:29.920]  because they're chartered by the state or the nation.
[01:39:29.920 --> 01:39:35.920]  That's where their charter comes from, whether you're a state bank or a national bank.
[01:39:35.920 --> 01:39:41.920]  They're acting under a permit, basically, that gives them...
[01:39:41.920 --> 01:39:43.920]  In other words, they're doing things illegally.
[01:39:43.920 --> 01:39:45.920]  That's what a license allows you to do.
[01:39:45.920 --> 01:39:48.920]  It's something that you're legally not capable of doing,
[01:39:48.920 --> 01:39:51.920]  except that this agency has been granted a license.
[01:39:51.920 --> 01:39:55.920]  They were granted a license to do the stuff they do.
[01:39:55.920 --> 01:40:02.920]  They're more fearful, as I say, of losing that license than they are dealing with you.
[01:40:02.920 --> 01:40:06.920]  Bank of America has had a number of these suits.
[01:40:06.920 --> 01:40:08.920]  They never seem to get published.
[01:40:08.920 --> 01:40:12.920]  They've paid money back on them.
[01:40:12.920 --> 01:40:16.920]  I suggest the UCC-11.
[01:40:16.920 --> 01:40:21.920]  Anyone who has a notice of tax leave filed them a county record.
[01:40:21.920 --> 01:40:24.920]  Go to the Secretary of State, tell them to give the UCC-11,
[01:40:24.920 --> 01:40:29.920]  then send a letter to the county clerk and demand it to be removed,
[01:40:29.920 --> 01:40:33.920]  because they didn't go through the proper process and they didn't perfect the lien.
[01:40:33.920 --> 01:40:35.920]  They have to remove it.
[01:40:35.920 --> 01:40:39.920]  Can you explain the process for perfecting the lien?
[01:40:39.920 --> 01:40:42.920]  Well, they've got to go, I forgot what it is, maybe power members it is,
[01:40:42.920 --> 01:40:43.920]  but they've got to have a-
[01:40:43.920 --> 01:40:49.920]  Perfecting, well, whenever, let's say you've got a tax debt
[01:40:49.920 --> 01:40:52.920]  and they come after you to collect the tax debt and they send you out,
[01:40:52.920 --> 01:40:55.920]  I don't remember all the farm numbers they used, but you know,
[01:40:55.920 --> 01:41:01.920]  a warning, emergency, important, we're about to put a lien or a levy on you
[01:41:01.920 --> 01:41:05.920]  and we have the right to, you know, sell everything you own
[01:41:05.920 --> 01:41:08.920]  and attach your funds and all that.
[01:41:08.920 --> 01:41:13.920]  That's all fine and good on the face of it that they send all that stuff,
[01:41:13.920 --> 01:41:18.920]  but in order for that to be a perfected lien,
[01:41:18.920 --> 01:41:25.920]  they have to have allowed you an opportunity to face your accuser in a courtroom
[01:41:25.920 --> 01:41:31.920]  to present your side of the story and to cross-examine them,
[01:41:31.920 --> 01:41:37.920]  and the judge then has to rule as to whether this thing is legal and true
[01:41:37.920 --> 01:41:41.920]  and, you know, a perfected lien.
[01:41:41.920 --> 01:41:44.920]  And then the judge issues the order that tells the bank
[01:41:44.920 --> 01:41:48.920]  to release the funds to, you know, this particular agency.
[01:41:48.920 --> 01:41:50.920]  That was what I was thinking.
[01:41:50.920 --> 01:41:57.920]  If I put my funds in trusts to a bank and they take my funds
[01:41:57.920 --> 01:42:02.920]  and give them to someone else without my permission,
[01:42:02.920 --> 01:42:05.920]  then I look at that as embezzlement.
[01:42:05.920 --> 01:42:07.920]  Well, it's embezzlement.
[01:42:07.920 --> 01:42:12.920]  It's also a violation of the judiciary custodian and trust rules.
[01:42:12.920 --> 01:42:13.920]  Right.
[01:42:13.920 --> 01:42:17.920]  That's the rules that I wanted to talk about if you knew what they were.
[01:42:17.920 --> 01:42:19.920]  Well, I know what they are.
[01:42:19.920 --> 01:42:22.920]  I don't know that I can drag them out, you know, I know where to go find them.
[01:42:22.920 --> 01:42:23.920]  Okay.
[01:42:23.920 --> 01:42:26.920]  If you can tell me that, that will be enough.
[01:42:26.920 --> 01:42:28.920]  What's – are you in Texas?
[01:42:28.920 --> 01:42:29.920]  Yes, sir.
[01:42:29.920 --> 01:42:32.920]  Texas Trust Act.
[01:42:32.920 --> 01:42:39.920]  I've got a – I can send Randy a – I'll find it real quick
[01:42:39.920 --> 01:42:44.920]  and tell you what the name of it is.
[01:42:44.920 --> 01:42:50.920]  It's the bankers' – bankers' – it's an unpublished book that I happen to have,
[01:42:50.920 --> 01:42:59.920]  but I've got it online too, so the bankers' – I think it's the bankers' secret manual.
[01:42:59.920 --> 01:43:08.920]  But it deals with their fiduciary duties as – you see, they're your agent and your fiduciary,
[01:43:08.920 --> 01:43:14.920]  and they have to maintain a certain level of trust that's higher than the –
[01:43:14.920 --> 01:43:18.920]  than the, you know, common sense rules or common law.
[01:43:18.920 --> 01:43:26.920]  It's a – but the Texas Trust Act spells it all out fairly clearly.
[01:43:26.920 --> 01:43:31.920]  A lot of that act deals with the states, which you can kind of blaze over,
[01:43:31.920 --> 01:43:36.920]  but the fiduciary requirements in that are pretty much the same as what the bankers have to deal with.
[01:43:36.920 --> 01:43:40.920]  Can you – can you email me that book?
[01:43:40.920 --> 01:43:41.920]  I'll do that.
[01:43:41.920 --> 01:43:42.920]  Oh, thank you.
[01:43:42.920 --> 01:43:43.920]  I'm looking for it right now.
[01:43:43.920 --> 01:43:49.920]  Yes, send it to me also, please.
[01:43:49.920 --> 01:43:52.920]  I've got a – I know I have it here, so I'll get it to you.
[01:43:52.920 --> 01:43:54.920]  Yes, send it to me also, please, Paul.
[01:43:54.920 --> 01:43:55.920]  Okay.
[01:43:55.920 --> 01:44:00.920]  And I got a – I just got a question from – Skyped in from one of our hosts,
[01:44:00.920 --> 01:44:06.920]  wanting to know if we could have their charter revoked.
[01:44:06.920 --> 01:44:13.920]  He's saying that Texas allows for an individual to file for charter revocation.
[01:44:13.920 --> 01:44:19.920]  Well, I – I think if you had a serious enough issue,
[01:44:19.920 --> 01:44:22.920]  that would be something that you could entertain.
[01:44:22.920 --> 01:44:28.920]  I don't know – I've not ever been involved with trying to revoke a charter.
[01:44:28.920 --> 01:44:30.920]  The way this system is working,
[01:44:30.920 --> 01:44:35.920]  it's not going to be much longer that all these charters are, you know, self-revoked, in my opinion.
[01:44:35.920 --> 01:44:37.920]  Yeah, really.
[01:44:37.920 --> 01:44:44.920]  The – I'd have to think about that.
[01:44:44.920 --> 01:44:49.920]  I know that – I know that they probably wouldn't revoke the charter
[01:44:49.920 --> 01:44:52.920]  if they got into the big middle of what they were doing.
[01:44:52.920 --> 01:44:58.920]  The FDIC would come in and they would find some other bank in the area that they would sell the accounts
[01:44:58.920 --> 01:45:05.920]  and the assets of the bank that you're going after, too, and that would be the end of that bank.
[01:45:05.920 --> 01:45:11.920]  I don't know that they're going to get into the revocation of charters just to –
[01:45:11.920 --> 01:45:18.920]  you know, when you think about what Enron did and what, you know, Madoff was able to do,
[01:45:18.920 --> 01:45:22.920]  it was all done through banks, and they didn't revoke any of their charters,
[01:45:22.920 --> 01:45:28.920]  and they're a lot bigger than probably anybody that's listened on this call and what their situation might be.
[01:45:28.920 --> 01:45:29.920]  All right.
[01:45:29.920 --> 01:45:32.920]  All right, Russell, do you have any more questions?
[01:45:32.920 --> 01:45:33.920]  No, that's it.
[01:45:33.920 --> 01:45:34.920]  Talk to you later.
[01:45:34.920 --> 01:45:35.920]  All right, great.
[01:45:35.920 --> 01:45:36.920]  Okay, would you like to take some –
[01:45:36.920 --> 01:45:37.920]  See you, Russell.
[01:45:37.920 --> 01:45:39.920]  Would you like – yes, thank you, Russell.
[01:45:39.920 --> 01:45:42.920]  Would you like to take some more calls, Paul?
[01:45:42.920 --> 01:45:44.920]  Well, do you want to run me off?
[01:45:44.920 --> 01:45:45.920]  Okay, no running off.
[01:45:45.920 --> 01:45:49.920]  Okay, we've got John from Georgia here.
[01:45:49.920 --> 01:45:50.920]  John, thank you for calling in.
[01:45:50.920 --> 01:45:53.920]  What is your question for our guest?
[01:45:53.920 --> 01:45:54.920]  Hey, good evening.
[01:45:54.920 --> 01:45:58.920]  I've got a couple of questions from listening to you guys.
[01:45:58.920 --> 01:46:05.920]  As a first-time homebuyer, what do you think of putting all rights reserved above your signature
[01:46:05.920 --> 01:46:14.920]  on a mortgage loan application and then going in later and doing a revocation of power of attorney?
[01:46:14.920 --> 01:46:22.920]  And would there be some way to replace the bank as the fiduciary and agent
[01:46:22.920 --> 01:46:25.920]  with somebody else that you'd want to appoint?
[01:46:25.920 --> 01:46:37.920]  And also, is there some way you could easily detect at what point the bank securitizes a mortgage loan?
[01:46:37.920 --> 01:46:41.920]  The bank is going to hold it on their books probably at least three years
[01:46:41.920 --> 01:46:44.920]  and maybe a little longer than three years.
[01:46:44.920 --> 01:46:45.920]  Okay.
[01:46:45.920 --> 01:46:53.920]  And the reason they do that is because at the end of three years they can claim that it is abandoned.
[01:46:53.920 --> 01:46:59.920]  So they may sell it within a week or the day that you close on it,
[01:46:59.920 --> 01:47:07.920]  but they'll maintain it on their records for probably three years so that at the end of that time
[01:47:07.920 --> 01:47:15.920]  they can issue a 1099A and claim that, you know, we've had this account.
[01:47:15.920 --> 01:47:16.920]  It's been open three years.
[01:47:16.920 --> 01:47:18.920]  There's never been any activity in it.
[01:47:18.920 --> 01:47:21.920]  The guy hasn't ever came back to claim it.
[01:47:21.920 --> 01:47:22.920]  We're saying it's abandoned.
[01:47:22.920 --> 01:47:23.920]  Can we have it?
[01:47:23.920 --> 01:47:28.920]  And the IRS will most likely grant them the account.
[01:47:28.920 --> 01:47:31.920]  After that, then they can do anything they want.
[01:47:31.920 --> 01:47:37.920]  You know, they don't have to hold it anymore.
[01:47:37.920 --> 01:47:40.920]  They may not hold the promissory note, as I say,
[01:47:40.920 --> 01:47:46.920]  but they're going to keep the account open for a minimum of three years so they can claim abandoned.
[01:47:46.920 --> 01:47:54.920]  Now, what you were asking about going in and putting that above or below your signature,
[01:47:54.920 --> 01:47:59.920]  when you sign that instrument, you and your wife or just you,
[01:47:59.920 --> 01:48:03.920]  and you sign the instrument, I don't know, Georgia is not a community property state,
[01:48:03.920 --> 01:48:08.920]  so you may be able to just do it with one signature.
[01:48:08.920 --> 01:48:15.920]  Once you've got that signed, they're going to have the title company is going to immediately rush over
[01:48:15.920 --> 01:48:19.920]  and get that deed of trust recorded in the county where you are
[01:48:19.920 --> 01:48:24.920]  so that the county can now start taxing that property.
[01:48:24.920 --> 01:48:26.920]  Okay.
[01:48:26.920 --> 01:48:32.920]  Once it gets on the tax rolls, you've got now kind of a two-headed monster you're having to deal with
[01:48:32.920 --> 01:48:36.920]  because the county is going to generate revenue that you're aware of,
[01:48:36.920 --> 01:48:43.920]  the money that they give you or tell you what you owe in a farm or property tax.
[01:48:43.920 --> 01:48:48.920]  But the county, the county attorney is most likely using the value of that property
[01:48:48.920 --> 01:48:55.920]  to send it along to the federal government in the form of a 1099.
[01:48:55.920 --> 01:48:59.920]  It's also a 1099A, but it's acquisition, not abandonment.
[01:48:59.920 --> 01:49:08.920]  And it's through that that the county is able to take all the property they have in their county
[01:49:08.920 --> 01:49:14.920]  and send the notices to D.C. to turn around and get these block grants.
[01:49:14.920 --> 01:49:20.920]  And what they're doing is they're using either a 1099A or a 1099OID
[01:49:20.920 --> 01:49:26.920]  to generate these block grants that you will never know about unless you're willing to go down to the IRS
[01:49:26.920 --> 01:49:35.920]  and file a farm that will produce the last three years of the corporate tax return for you.
[01:49:35.920 --> 01:49:41.920]  So you've got the mortgage company and you also now are dealing with the county.
[01:49:41.920 --> 01:49:44.920]  The county is generating a lot more revenue than what you think you're paying them
[01:49:44.920 --> 01:49:50.920]  in the farm or property tax off of that real property.
[01:49:50.920 --> 01:49:58.920]  And you've got a bank that's holding a negotiable instrument that they've issued you an amortization schedule on
[01:49:58.920 --> 01:50:02.920]  that you're going to pay for for 15 or 20 or 30 years.
[01:50:02.920 --> 01:50:10.920]  There are some methods that I'm aware of where you can do a quick claim on a quiet title
[01:50:10.920 --> 01:50:22.920]  and then you're going to have to be the plaintiff in a cause of action against the bank or the servicing company
[01:50:22.920 --> 01:50:26.920]  and prove up the fact that they never made the loan to you.
[01:50:26.920 --> 01:50:34.920]  And it has and can be done, but they're going to fight you because this information is the stuff
[01:50:34.920 --> 01:50:41.920]  that they cannot afford to ever let get out where it becomes published precedent.
[01:50:41.920 --> 01:50:43.920]  So it can be done.
[01:50:43.920 --> 01:50:45.920]  It has been done.
[01:50:45.920 --> 01:50:52.920]  There's a guy I know of and I think he's in Montana that has done a lot of it for people.
[01:50:52.920 --> 01:50:57.920]  But I personally, I'm aware of what they do, but I haven't personally done it,
[01:50:57.920 --> 01:51:02.920]  so I'm not going to be someone that can really give you a lot of direction other than I know it.
[01:51:02.920 --> 01:51:05.920]  I know it's possible.
[01:51:05.920 --> 01:51:09.920]  Well, now, I can address one thing in dealing with that all rights reserved written on the document.
[01:51:09.920 --> 01:51:16.920]  From personal experience, I know that if a bank, a higher-up person in a bank sees that on a document,
[01:51:16.920 --> 01:51:18.920]  they will refuse to do business with you.
[01:51:18.920 --> 01:51:21.920]  They will not accept the document that contains that statement.
[01:51:21.920 --> 01:51:25.920]  But now, if you read the UCC requirements for that very carefully,
[01:51:25.920 --> 01:51:32.920]  you will see that there is no requirement that the reservation of your rights be written on the instrument.
[01:51:32.920 --> 01:51:36.920]  It simply states that a declaration of your rights must be made.
[01:51:36.920 --> 01:51:41.920]  Therefore, you can make that declaration verbally if you wish to do so.
[01:51:41.920 --> 01:51:45.920]  But if you write it on that piece of paper, they're going to refuse that piece of paper.
[01:51:45.920 --> 01:51:47.920]  Hands down, no ifs, ands, or buts.
[01:51:47.920 --> 01:51:51.920]  If that person in there is an officer, they know what that means,
[01:51:51.920 --> 01:51:55.920]  and they know that they're in trouble if they accept that paper.
[01:51:55.920 --> 01:51:57.920]  It's not going to happen.
[01:51:57.920 --> 01:52:03.920]  Have you looked at your check, any of these commercial checks that you get,
[01:52:03.920 --> 01:52:11.920]  whether the bank prints it for you or you order it from someone that your name is always in all uppercase letters?
[01:52:11.920 --> 01:52:17.920]  If you'll take that check and go to a place where there's a real good microscope
[01:52:17.920 --> 01:52:22.920]  and put that check under a microscope and look at the signature line that you sign on,
[01:52:22.920 --> 01:52:25.920]  it looks like a line to the normal naked eye.
[01:52:25.920 --> 01:52:32.920]  It says authorized representative, authorized representative, authorized representative throughout that entire line.
[01:52:32.920 --> 01:52:33.920]  Microprint.
[01:52:33.920 --> 01:52:36.920]  Yep.
[01:52:36.920 --> 01:52:45.920]  So they know who you are, and they know what capacity you're in when you sign a check.
[01:52:45.920 --> 01:52:50.920]  I concur with what was just said about the bank.
[01:52:50.920 --> 01:52:54.920]  They won't, I mean, the banks, any car company won't do business with you
[01:52:54.920 --> 01:53:00.920]  if you get to the loan department of a car company and write that on there.
[01:53:00.920 --> 01:53:04.920]  No, it's interesting because I've taken out quite a sizable personal loan in the past,
[01:53:04.920 --> 01:53:09.920]  and I actually did write that across my signature, and they still accepted the application,
[01:53:09.920 --> 01:53:16.920]  and they haven't refused it or done anything derogatory to this date because of that.
[01:53:16.920 --> 01:53:21.920]  Well, you've been fortunate that you've met an uneducated bank officer.
[01:53:21.920 --> 01:53:31.920]  I was going to say that the bank officer that you're dealing with is just not as well acquainted as he ought to be.
[01:53:31.920 --> 01:53:39.920]  So I can tell you, I used to deal with banks.
[01:53:39.920 --> 01:53:45.920]  I've owned a pretty large shop, you know, a bunch of brokers working for me.
[01:53:45.920 --> 01:53:50.920]  I had at one time with a locally owned bank, just four holding companies and all that,
[01:53:50.920 --> 01:53:56.920]  but $100,000 line of credit on a signature only.
[01:53:56.920 --> 01:54:00.920]  Pick up the phone and say, I need $35,000, $40,000.
[01:54:00.920 --> 01:54:03.920]  Put it in a new office.
[01:54:03.920 --> 01:54:06.920]  I'll be down three or four days to sign the paperwork.
[01:54:06.920 --> 01:54:13.920]  They would put the money into my account that day, and I'd go in there, you know, within that week and sign for it.
[01:54:13.920 --> 01:54:17.920]  Well, all that changed when the holding companies came along,
[01:54:17.920 --> 01:54:22.920]  and if you notice, if you're dealing with a bank that's a member of a holding company,
[01:54:22.920 --> 01:54:24.920]  the bank officers don't hang around that bank very long.
[01:54:24.920 --> 01:54:28.920]  They move them around quite a bit, so you're not always dealing with it.
[01:54:28.920 --> 01:54:33.920]  Now, you may be in a small enough area of Georgia that you're not experiencing it,
[01:54:33.920 --> 01:54:42.920]  but you get in any kind of a major city, these bankers are moving quite often.
[01:54:42.920 --> 01:54:50.920]  You don't stay with the same bank loan officer that you start with.
[01:54:50.920 --> 01:54:54.920]  Ken, is there a reason for that?
[01:54:54.920 --> 01:55:06.920]  Well, I think some of it's promotion, some of it's turnover, some of it is just, you know,
[01:55:06.920 --> 01:55:08.920]  guys decide they can do something.
[01:55:08.920 --> 01:55:11.920]  Some of them wake up to what they're really doing and don't like themselves
[01:55:11.920 --> 01:55:17.920]  and just get out of the banking business.
[01:55:17.920 --> 01:55:25.920]  The holding company situation primarily is to keep the personnel turned over enough
[01:55:25.920 --> 01:55:32.920]  to where they make them think that they're really, you know,
[01:55:32.920 --> 01:55:34.920]  helping the bank and moving along,
[01:55:34.920 --> 01:55:42.920]  and they can bring other people in at a lower cost to that particular branch
[01:55:42.920 --> 01:55:46.920]  by hiring somebody that's newer and younger and with less experience.
[01:55:46.920 --> 01:55:51.920]  And I would imagine that it helps them cover up their shenanigans too.
[01:55:51.920 --> 01:55:57.920]  Well, it helps also facilitate the possibility the banker doesn't become involved
[01:55:57.920 --> 01:56:00.920]  with the customers of the bank to such a point that a clash of conscience
[01:56:00.920 --> 01:56:05.920]  will have them do things that do not benefit the bank either.
[01:56:05.920 --> 01:56:11.920]  Exactly.
[01:56:11.920 --> 01:56:14.920]  Okay, any more questions, John?
[01:56:14.920 --> 01:56:21.920]  Yes, have you seen anybody tender a bonded promissory note to discharge
[01:56:21.920 --> 01:56:24.920]  or to offset a mortgage?
[01:56:24.920 --> 01:56:26.920]  Have you heard or seen anybody do that?
[01:56:26.920 --> 01:56:32.920]  Yes, I have, and I know that in some cases it's worked and in other cases it has not,
[01:56:32.920 --> 01:56:40.920]  and it depends on just how you're, you know, again,
[01:56:40.920 --> 01:56:45.920]  there's an awful lot of fingers that go into making this, you know, this mud pie,
[01:56:45.920 --> 01:56:48.920]  and you've got to be able to cover.
[01:56:48.920 --> 01:56:55.920]  It's like playing chess, and you need to have more than one front attack,
[01:56:55.920 --> 01:56:59.920]  and you need to be able to get them into a position where either way they turn,
[01:56:59.920 --> 01:57:05.920]  they lose, and it becomes less cumbersome on their part to write the loan off.
[01:57:05.920 --> 01:57:09.920]  That's the nice thing for them to say, we're just going to write this loan off.
[01:57:09.920 --> 01:57:20.920]  They don't have any loan to begin with, so it's just to get out from under the fact
[01:57:20.920 --> 01:57:23.920]  that it may end up in a very embarrassing situation,
[01:57:23.920 --> 01:57:29.920]  and many other of their customers will learn of it, and they will lose credibility,
[01:57:29.920 --> 01:57:36.920]  they will lose the bank, they'll, you know, the whole house of cards could collapse.
[01:57:36.920 --> 01:57:41.920]  That brings a question to mind, something I haven't been able to get answered.
[01:57:41.920 --> 01:57:46.920]  I've talked to people who file these bonded promissory notes
[01:57:46.920 --> 01:57:52.920]  and don't get them back and maintain that whoever they gave them to monetized them.
[01:57:52.920 --> 01:57:57.920]  Well, if they monetized them, it has to leave an audit trail.
[01:57:57.920 --> 01:57:58.920]  It does.
[01:57:58.920 --> 01:58:01.920]  Where would we look for that audit trail?
[01:58:01.920 --> 01:58:07.920]  Whether it's monetized or not, Randy, in my mind,
[01:58:07.920 --> 01:58:14.920]  you never want to send a promissory note in any other capacity than registered mail.
[01:58:14.920 --> 01:58:16.920]  Well, they've done that.
[01:58:16.920 --> 01:58:22.920]  All right, and once you've done that, see, that ensures the contents of that mail,
[01:58:22.920 --> 01:58:24.920]  unlike certified mail.
[01:58:24.920 --> 01:58:29.920]  Then you've got the green card back showing that they received it,
[01:58:29.920 --> 01:58:32.920]  and they never returned the promissory note.
[01:58:32.920 --> 01:58:35.920]  So you've got two avenues to pursue it in my mind now.
[01:58:35.920 --> 01:58:39.920]  All right, listen, wait, wait, hold on, Paul, we're going to break now.
[01:58:39.920 --> 01:58:42.920]  John, did you have any other questions?
[01:58:42.920 --> 01:58:44.920]  No, and thank you for your time, Paul.
[01:58:44.920 --> 01:58:45.920]  Okay, thank you.
[01:58:45.920 --> 01:58:48.920]  Okay, we'll be right back with Paul to finish answering this question
[01:58:48.920 --> 01:58:50.920]  about the bonded promissory note.
[01:58:50.920 --> 01:58:53.920]  We've got other callers on the line, Gary, Brady, Kyle, Dan.
[01:58:53.920 --> 01:59:03.920]  We'll be taking your calls on the other side.
[01:59:23.920 --> 01:59:48.920]  Thank you.
[01:59:48.920 --> 01:59:54.920]  Thank you.