lack of bank prosecutions

Obama Names Wall Street Defense Attorney to Head the SEC

Will America finally get justice for crimes on Wall Street?  We think not.  Today, President Barack Obama named Mary Jo White to head the Securities and Exchange Commission.  The White House and most of the press are touting her credentials as a former New York Southern District prosecutor.  From the White House press briefing:

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.

Snippets From the 50 State Mortgage Settlement

mersAs expected, states were strong armed by the administration and have agreed to a $25 billion, 50 state mortgage fraud settlement with five banks for robo-signing and mortgage fraud. According to the Wall Street Journal:

The agreement covers five banks: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Together, the five firms handle payments on 55% of all home loans outstanding, or about 27 million mortgages, according to Inside Mortgage Finance.

While the banks pony up $25 billion, they are the ones who made out like bandits.

About $5 billion would be cash payments to states and federal authorities, $17 billion would be pegged for homeowner relief, roughly $3 billion would go for refinancing and $1 billion would be paid to the Federal Housing Administration.

Who's the Big Bad Wolf Now on Foreclosure Fraud and Abuse?

three pigsWe all know the story of the three little pigs and the big, bad wolf.

Little pig, little pig, let me come in.
No, no, not by the hair on my chinny chin chin.
Then I'll huff, and I'll puff, and I'll blow your house in.

To date that's been the story of the banks as the big bad wolf, blowing houses down all over America with fraudulent foreclosures, viewing home owners as tasty piglet snacks of profit.

Will we ever see role reversal in this never ending grim tale? Will the big bad wolf finally be our government, blowing down the Banks' house of mortgage and foreclosure fraud? Can the government at least hand Americans just a few bricks at least? It's yet to be seen.

The latest seems to be dueling events. One the one hand, there is a foreclosure fraud settlement in the works for all 50 States, which supposedly gives banks immunity and waves all future legal actions. Yet at the same time, the New York Attorney General filed a civil fraud lawsuit against three major banks over MERS.

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.

Harry's Law Takes On Bank Bail Outs, Channels OWS

This evening's episode of Harry's Law literally takes on the banks and uses the show, as a Populist soapbox. The plot contrasts how a homeless, foreclosed on, single mother, turned bank robber, gets 20 years, yet if one is incorporated and has lobbyists, then one gets $7.7 trillion in Federal Reserve loans. The episode is below.

 

Some Ridiculous Statistics At A Glance

Welcome to the concentrated boiling up of economic graph-o-rama absurdity and horror in number form. Every week, economic data pours in and some damning statistics go flying by with nary a nod.

 

Financial Crime Prosecutions

Syracuse University, through their Transactional Records Access Clearinghouse, analyzed Justice department data. They found the number of prosecutions for financial fraud is dramatically down, 28.6%, from just five years ago.

"Take Care That the Laws be Faithfully Executed"

There is a story that appeared yesterday in The New York Times that would have been worth reading if it had been published five years ago. In the article, the reporter, Edward Wyatt, analyzes the propensity of the largest financial institutions to violate securities laws despite having previously violated these same laws and made promises to the Securities and Exchange Commission never to violate them again.

The New York Times has a portentous way of writing such stories, as if the information they have uncovered is revelatory if not earthshattering. Case after case is presented, experts are interviewed and asked to provide analysis, and some weighty conclusions are reached. Readers should be left with at least a slight feeling of outrage that such things have been going on in high finance.

As an ex-subscriber to The New York Times, I too have been outraged by such stories, but not because I read them in the paper of record, which is not simply very late to the game of reporting on this phenomenon - it is too late. I’ve been outraged by these stories because I have been reading about this for years on internet blogs. Some of the most persistent reporters and analysts who write about this problem include Glenn Greenwald at Salon.com, Yves Smith at the Naked Capitalist blog, and Karl Denninger at the Market Ticker blog. All three of these writers have no doubt lost some readers over the years because they write about these stories over and over, and manage to maintain a sustained fury over the debasement of the rule of law that is evidenced by the way the big banks operate, and the inability or refusal of the government to do much about it.