What's Up in Bankster Land?

bankstersIt might just be election time. We have Bank of America being sued for Countrywide's hustle, a program which pawned off bad mortgages onto Fannie Mae and Freddie Mac from 2007 to 2009. The U.S. District Attorney, Office’s Civil Frauds Unit in New York filed a civil complaint against BoA, who acquired Countrywide, for $1 billion.

The Complaint seeks civil penalties under FIRREA, as well as treble damages and penalties under the False Claims Act, for over $1 billion in losses suffered by Fannie Mae and Freddie Mac for defaulted loans fraudulently sold by COUNTRYWIDE and BANK OF AMERICA.

Manhattan U.S. Attorney Preet Bharara said: “For the sixth time in less than 18 months, this Office has been compelled to sue a major U.S. bank for reckless mortgage practices in the lead-up to the financial crisis. The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope. As alleged, through a program aptly named ‘the Hustle,’ Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill. As described, Countrywide and Bank of America systematically removed every check in favor of its own balance – they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects. These toxic products were then sold to the government sponsored enterprises as good loans. This lawsuit should send another clear message that reckless lending practices will not be tolerated.”

Abacus Bank Faces Criminal Charges for Liar Loans Yet Most Who Perpetuated the Financial Crisis Go Unpunished

dropinbucketOn May 31st, Manhattan prosecutors filed criminal charges against Abacus Federal Savings Bank and 19 employees. These are the first criminal charges against an actual bank associated with the financial crisis. This very small bank issued fraudulent mortgages, otherwise known as liar loans and sold them to Fannie Mae.

Abacus Federal Savings Bank, a small bank with a major presence in New York City’s Chinese community, and 19 of its former employees have been charged with inflating the qualifications of mortgage applicants to meet federal loan standards, a scheme that prosecutors say brought the bank tens of millions of dollars in ill-gotten fees and sent hundreds of millions of dollars in risky mortgages to the investment market.

The thing is liar loans were extremely common, so why would New York Prosecutors go after this small community bank instead of the larger fish? Politics and resources.

Bill Black in the below Bloomberg law interview says this prosecution will probably be our token sacrifice. In other words, don't expect Countrywide, notorious for liar loans and now part of Bank of America to be put in cuffs, doing the perp walk.

There is No Justice When It Comes to the Banks

There is no Justice. Countrywide financial settled a civil action by the Department of Justice for $335 million. This equates to $1,675 dollars in compensation for each of the 200,000 listed victims. Meanwhile Hispanics and Blacks were pushed into sub-prime loans which drove the housing bubble, prices, through the roof. Many lost their homes in foreclosure due to bubble payments and high interest rates, when a regular mortgage payment might have been financially feasible.


Fannie & Freddie Executives Sued by SEC

nunrulerThe SEC had sued Fannie Mae and Freddie Mac executives with securities fraud, three years after the fact. The fraud charges are about lying to investors over subprime loans.

They knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.

This is a civil case, not a criminal one. Most interesting while going after some ex-executives the SEC lets Fannie and Freddie off the hook. Nothing happens to the two GSEs now.

Fannie Mae and Freddie Mac each entered into a Non-Prosecution Agreement with the Commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability. Each also agreed to cooperate with the Commission's litigation against the former executives.

The case is being filed in New York State and the three former executives from Fannie Mae are Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Fannie Mae's Single Family Mortgage business, Thomas A. Lund.

Freddie Macs sacrificial lambs are Chairman of the Board and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook, and former Executive Vice President for the Single Family Guarantee business Donald J. Bisenius.

60 Minutes Asks Why Isn't Anybody in Jail for the Financial Crisis?

You might recognize a pattern. There is systemic fraud inside a corporation. Someone tries to blow the whistle. Their reward? Fired, their income lost and reputation ruined. Such is the fate of those who tried to do anything regarding the massive subprime mortgage fraud, a major underlying cause of the financial crisis.

Friday Movie Night - Breaking The Bank

hot buttered popcorn It's Friday Night! Party Time!   Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!


Before we get to the documentary, if you missed this one, it's a must watch! Before Congress, health insurance executives refuse to stop rescinding health insurance coverage, retroactively, when a person actually gets sick! Reminds me of the big Tobacco CEOs Seven Dwarfs famous clip, all under oath swearing they did not believe nicotine is additive.

CountryWide: Rigged Game

Why would Bank of America buy out irresponsible Countrywide?

Well, to avoid paying any taxes by writing off the massive bad loans, that's why.

And the Countrywide CEO? He gets $88M for running a major company into the ground, requiring a buyout, causing millions to lose their homes, setting up greedy, predatory mortgages where no one could pay them off.