Sunday, November 23, 2008

Feds In League With Fraudulent Mortgage Lenders?

Ever wondered why we still haven't seen major arrests against big mortgage lenders? In the olden days, we saw perp walks of Enron executives when federal agents dragged handcuffed executives before national media for everyone to see and to set example. However, so far, we haven't seen such arrests except for individual small-town mortgage lenders.

Don't expect a scapegoat for the financial crisis because there'll be no arrest against big corporate lenders. In case you didn't know, the feds were encouraging subprime lending. Well, some call it subprime lending. Others call it mortgage frauds. William Black, Associate Professor of Economics and Law at the University of Missouri, Kansas City and a former federal regulator says:


Making a loan knowingly with misrepresentations is illegal, and not revealing it in your public reports is securities fraud, and selling it to other parties without telling them about the fact that the loans will never be repaid, that's fraud.

As early as 2004, the FBI knew of fraud incidence of 50% at major subprime lenders like IndyMac and Countrywide. But, the FBI made a strategic alliance with the Mortgage Bankers Association instead of going for prosecution.

Well, facing criticism, the feds are going after the wrong guys like Mark Cuban.


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