In the news today:

“There was the appearance of fraud or misrepresentation in almost every file,” Fitch Investors declared in late 2007 after reviewing nonperforming subprime MBS (the same stuff they, S&P and Moody’s rated triple-A).

Black estimates there are as many as 500,000 cases of mortgage fraud that need to be investigated. Furthermore, such extensive mortgage fraud led to accounting fraud, which led to securities fraud at any/all publicly traded mortgage lenders. As with the FBI, the SEC was “completely ineffective” in stopping such crimes, much less investigating them now, he says.

“Among the biggest mortgage lenders, IndyMac was put into FDIC receivership, Countrywide was acquired by Bank of America, Golden West was acquired by Wachovia, and WaMu was ultimately acquired by JPMorgan.

This is relevant because the government’s current practice of keeping banks’ senior management and boards intact (unlike, say GM’s) is effectively prohibiting any investigation of possible (likely) wrongdoing at those firms.

It is for these reasons Black says the FBI’s current level of 800 cases per year is “no longer symbolic prosecutions, it’s shambolic prosecutions….”

More here.

Comment

Why isn’t  the FBI on the case? Why don’t we have criminal convictions at a higher level? Note: 80% of the fraud is not from the borrowers, they say, but from the lenders. 

This is exactly the point I made arguing against nationalization. All it does is prevent investigation. And it makes the government (i.e., the public, that is, you) responsible for the banks’ losses.  Stick your fingers into your ears and close your eyes and don’t listen to the siren call of the state…..offering anything...forget it.