The Model is the Message

Over the weekend, I received an email from Harmon Taylor of Legal Reality.  It contained an article about U.S. Bankruptcy Judge Robert Grossman's decision that the MERS business model was unlawful.

The story about subprime mortgages is important but more important is to look at the business model itself because the model is what is being referred to as a  "market-based" structure. 

When our government was "reinvented" by Al Gore and Bill Clinton, the systems of government were designed to be "market-based".    Essentially, they corporatized our government and the systems of government were designed to be management systems that crossed the boundaries of government into the private sector which, in effect, set up a system of socializing costs and privatizing profits.

The socialization of costs occurs because of the collectivization (aggregation) of like entities in the system design.  In the case of MERS, records of mortgages were created and put into a database.  The note was a separate record so that it could be traded without the ordeal involved in clearing the physical records of the mortgage. 

It was intended that the MERS system would manage the records for all mortgagers and the financial sector so that they could trade the paper.    

MERS is just one example.  Another example is the "reformed" health care system that people are calling Obama Care.   It's not really Obama Care.   The redesign of our health care system began in 1990 with project being initiated during the George H.W. Bush administration.

In the "reformed" health care system, medical records are being collectivized into a database to be managed by a third party with access being provided to all interested parties (patient privacy of no concern). 

The Health Insurance Exchange then becomes the "market manager" between the providers and the health insurance consumers - each of which are collectivized entities in the system design.   The effect is that the government (HIE's are either state run or third party (federal contractors)) becomes the manager of the "market". 

Over the weekend, Amanda Teegarden and I worked on a flyer for the Oklahoma legislators who are going to vote on the creation of the Oklahoma State Health Insurance

New York's U.S. Bankruptcy Court Rules MER's Business Model Is Illegal by L. Randall Wray


Here's MERS's business model in brief. Real estate property sales and mortgages are supposed to be recorded in local recording offices, with fees paid. With the rise of securitization, each mortgage might be sold a dozen times before it came to rest as the collateral behind a mortgage backed security (MBS), and each of those sales would need to be recorded. MERS was created to bypass public recording; it would be listed in the county records as the "mortgagee of record" and the "nominee" of the holder of mortgage. Members of MERS could then transfer the mortgage from one to another without all the trouble of changing the local records, simply by (voluntarily) recording transactions on MERS's registry.

A mortgage has 2 parts, the "note" and the "security" (not to be confused with the MBS) or "deed of trust" that is usually just called the "mortgage". The idea behind MERS was that the "note" would be transferred from seller to purchaser, but the "mortgage" would be held by MERS. In fact, MERS recommended that the "note" be held by the mortgage servicer to facilitate foreclosures, but in practice it seems that the notes were often lost or destroyed (which is why all those Burger King Kids were hired to Robo-sign "lost note affidavits").

At each transfer, the note & mortgage are supposed to be "assigned" to the new owner; MERS claimed that because it was the "mortgagee of record" and the "nominee" of both parties to every transaction, there was no need to assign the "mortgage" until foreclosure. And it argued that since the old adage is that the "mortgage follows the note" and that both parties intended to assign the notes (even if they did not get around to doing it), then the Bankruptcy Court should rule that the assignments did take place in some sort of "virtual reality" so that there is a clear chain of title that allows the servicers to foreclose.

Exchange "market".  The intent was to make it absolutely clear to legislators what they would be voting on:

Flyer - Oklahoma -  Health Insurance Exchange

As the model pertains to the utility companies, I described the "market" that was being created by utility regulators in my response to Idaho Power on the issue of the Smart Meters.  The separation of electric generation from distribution and transmission, with the creation of "virtual electricity suppliers" is the creation of an artificial "market". 

Response to Idaho Power's Answer 2/21/2012    [  Idaho Power's Answer to Summons  ]

America's Talent Bank and Job Bank - same model

What all of these systems are is the implementation of "managed capitalism" which is an oxymoron.  What it really is - is the communist system of collectivism as designed by Technocrats to produce a fascist system of a centrally planned, and managed economy. 

The model IS the message.

Vicky Davis
February 27, 2012

P.S.   If you would like to subscribe to Harmon's newsletter, send him an email with the word Subscribe in the subject line. 

Legal Reality <>