More Fraud
In Digby’s post. Don’t Worry Your Pretty Little Heads About This Foreclosure Mess, you have a CNBC “pundit” declaring that Congress will just pass a bill to fix this.
This individual hasn’t been listening to all of the “states rights” drum beating going on, because property law is state law. The Federal government isn’t involved. No one is going to allow a bill to sneak through, like that law that Obama used the pocket veto on, at this point. No one is going to agree to a voice vote. After the big drop in campaign contributions to the Democrats, why would they help out the banksters again? With the Tea Partiers clamoring for heads, why would the Republicans risk it?
Michael Collins at the Agonist has excerpts from a Felix Salmon piece in The enormous mortgage-bond scandal. but the interesting bit was actually in comments.
This individual presents a reasonable hypothesis for why the banks seem to be ignoring modifying loans, and are conducting a massive number of foreclosures:
Mortgage insurance payoffs. Ah, so.
Once MERS (Mortgage Electronic Registration System) was established in ’97, all the banks and lenders started securitizing fraudulent mortgages and losing the paperwork as fast as they could. No auditing allowed, not by the banks themselves nor by the investors who bought these MBS instruments. Any sampling done was kept from investors. Proprietary information and all that.
The mortgages in these MBS bundles were insured against default. The Chinese banks who bought so many of these bundles were especially careful to insure against default.
The insurance won’t pay off unless there is a foreclosure, so the foreclosures stall demands for the banks to buy back the mortgages from the bond holders. If the bond holders do bring suit they will double their money, as they get the insurance payout for the foreclosed property, and then the bank is on the hook for the original cost.
There was a time when I thought the military was the most incompetent organization on earth, but the financial industry has taken first place without breaking a sweat.
6 comments
Oh, I don’t think this is a result of incompetance. More and more this is looking like a carefully laid out plan that would have had some very big winners if Obama hadn’t come in and made the TARP fund takers repay that money. They didn’t plan on that. They didn’t plan on Elizabeth Warren entering from stage left, either. I believe they planned on it playing out the way the Savings and Loan robbery did.
Until people start going to prison for significant periods, this is not going to stop. So far none the people on top have paid a real price for all of their frauds.
There is no point in continuing to prop up these criminal conspiracies. Return the depositors money to them and run the banks through bankruptcy. There was no guarantee that investments in the banks were risk free, so people holding the stock and bonds will have to absorb the cost of their gamble on what the banks were doing. The system is called capitalism, and it is time for the wealthy investors to find out what that really means.
I am all in favor of establishing significant criminal penalties for corporate crimes, and I would even support a federal policy that would require those convicted of such crimes be housed in state prisons in the general population. These people have suffered no personal consequences, and it would take an act of Congress to establish laws that couldn’t be swiped away with the change of administration. But of course, that would be a “NO” Heck, even the local community bank won’t prosecute a bookkeeper that embezzles money from an account. Criminal penalties for corporate crimes is something that the public would have to demand be changed, and we would have to shout louder than the sound of money in a lobbyists pocket.
It is amazing want you get away with when you steal enough money. Steal a loaf of bread because you’re hungry, go to jail. Steal the bakery with a fraudulent mortgage and you get a bonus.
As you say, it will take voters to get significant penalties attached to “white-collar crime”. The dishonest corporations drive the honest businesses out. When the government ignores crimes because they are committed by corporations, they encourage the behavior.
If the people at the top were held responsible for the behavior of their corporation, a lot of things would change. That would be a major incentive for corporations to police themselves.
This story brought tears to my eyes. Sorrow for these women, and sorrow for my country. Perhaps we should begin to collect information such as this, a gathering of stones if you will.
http://www.nytimes.com/2010/10/16/opinion/16herbert.html?_r=1&th&emc=th
I have to feel that the sisters, or their family, have enemies, because the case makes no sense unless someone was pushing very hard for it. There has to be more to the story than anyone will say. It makes no sense to keep them in prison any longer.