Update on the financial crisis ... I'm still mad.

[Eddie Haskell]

In September of 2004, the FBI testified before the House of Representatives. In their words, there is an "epidemic of mortgage fraud" that, if not contained, will cause a "financial crisis".

So you have the FBI warning of massive fraud which leads to an economic crisis in 2008 and how many criminal referrals did the Justice Department issue? Zero.

http://www.financialsense.com/financial-sense-newshour/guest-expert/2011/09/14/william-k-black-phd/why-nobody-went-to-jail-during-the-credit-crisis

"They completely shut down making criminal referrals and whichever administration you hate the most, you can hate because while most of this occurred in the Bush Administration, the Obama Administration has obviously not changed it. Obviously they did not see it as a priority to prosecute the elite criminals who caused this devastating injury."

[Autumn]

1. We may see them as "elite criminals"

Obama and the politicians in DC see them as "campaign donors". Gives you an idea of where our "leaders" priorities are.

[Eddie Haskell]

3. It also shows how this "class war" got started.

We have a two-tiered system of justice in America and one tier looks is inactive. Justice must be served.

[blindpig]

4. In Capitalism money is the measure of freedom.

Boundless wealth makes for the freedom to do anything, anything.

k&r

[zazen]

2. Our Congressman Brad Miller (D, NC) was a crusader on this before 2008

From Reuters:

The mortgage crisis crusader

I had met Congressman Miller several times on Capitol Hill when I lead Riski, the open source financial reform project, and I’d always been very impressed with his forward-looking efforts on the housing crisis. Once you are around Congress for a while it’s easy to see what special interests various members of Congress are promoting. Congressman Miller seemed genuinely independent and interested in America as a well-governed and fair nation. Sad to say these are not common traits on the Hill.

Congressman Miller is not new to the mortgage issue. In March 2007 he penned a letter to Forbes magazine about the scourge of predatory lending and its devasting effect on families. . .

Peter J. Henning, writing in Dealbook, has an excellent legal analysis of the lawsuits filed by the FHFA in which he details their statutory basis. Read that piece if you are interested in the legal angle of the story. But it’s the crusading element of Congressman Miller that fascinates me. Members of Congress live and die by political contributions and it’s very rare to find a congressman willing to cross the banks, which are substantial donors. When I asked Congressman Miller about the Republicans on the House Financial Services Committee and their reaction to the FHFA lawsuits he said that he had just gotten back to DC and hadn’t been in touch with them but generally they were not supportive of the FHFA trying to make recoveries from the banks. He added that he and the Republicans also had no appetite for continued taxpayer bailouts of Fannie and Freddie.

It’s hard to overstate how powerful the banks are in the Congress and various agencies of government. I laud the acting director of FHFA, Edward DeMarco, and Congressman Miller for standing up and requiring adherence to the rule of law in the mortgage crisis. Their action is sending shockwaves through the financial sector; the American people are searching for some justice in this crisis which wrecked the economy and lives of million of families."

[Quantess]

5. Thanks for posting.

[banned from Kos]

6. you do realize the FBI was warning about CONSUMER fraud against

the banks/originators, right?

And that many indictments have occurred?

[Eddie Haskell]

7. Read the interview.

The fraud was part of the formula.

"Control fraud is when the person who controls a seemingly legitimate entity, uses it as a weapon to fraud. In the financial sphere, the weapon of choice is accounting. So here are the four ingredients of the recipe that produce a sure thing of record accounting income.

1.Grow like crazy
2.Make preposterously bad loans but at a premium yield.
3.Have extreme leverage. That means you have a ton on debt.
4.Put aside only ridiculously low allowances for future loan losses.

You do those four things, you are mathematically guaranteed to report record, albeit fictional, profits in the short term. You are also guaranteed with modern executive compensation, to make the Senior Executives wealthy, and you are guaranteed, because after all, if you think about those four ingredients, they are the perfect recipe as well for maximizing real losses."