July 12th, 2011
in Op Ed
by John Lounsbury
Shahien Nasirpour has an article at the Huffington Post today (July 11) that really has me steaming. He writes about state and federal prosecutors moving toward a proposed settlement with major home loan companies. Nasirpour reports the estimate is that the settlement of abuses is expected to come in at about $30 billion, without any admission of wrongdoing. In other words, all the criminal activities from origination, through misrepresented securities to mortgage processing and registration fraud would be absolved for a sum of money. Follow up:
Follow up:Part of the deal will be that the firms will “adhere to better practices going forward.” Better than what? Better than rape, plunder and creating a mess out of the world financial system? For this commentator that seems like a hell of deal. If I did tens of trillions of dollars of damage and got off for less than 0.5 cents on the dollar (and maybe even less than 0.1 cents), I’d be overjoyed. And without admitting I’d done anything wrong? Wow!
What is wrong is highlighted by Nasirpour:
"I would never want to go into a negotiation without solid evidence of actual misconduct to hold as leverage over my counterpart," said Neil M. Barofsky, the former special inspector general for the Troubled Asset Relief Program, which was crafted to bail out teetering banks. "It would also be very dangerous from a public policy perspective to waive all future claims as part of such a settlement if you do not have a good sense of the size, scope and severity of the underlying misconduct."
According to sources familiar with the ongoing state and federal probes, state and federal officials have wasted months not digging into the details of the foreclosure crisis, yielding little of value in court and undercutting the lenders' incentive to strike a settlement of greater benefit to homeowners and taxpayers.
The reason that there are no criminal prosecutions at high levels in the mortgage industry is that there have been no criminal investigations. The mortgage mess has tentacles that go out into all areas of banking and finance. The tentacles reach to the heart of TBTF (too big to fail) which is a controlling cabal of our government.
What is needed is a national crime commission that deconstructs the intricate relationships and gets to the bottom of who exactly controlled the many operations that descended into fraud. William K. Black has established a basic term that defines the criminal activity that has occurred at the highest levels: Control Fraud. Yes, there were perpetrators of specific fraudulent activities, but the larger crimes occurred at the command and control level.
Nasipour goes on to detail what hasn’t been done:
The investigators have yet to gather many documents, conduct depositions or assemble tallies of aggrieved homeowners. They don't yet have a good handle on the number of wrongful foreclosures, the amount of fraudulent documents filed in local courts or the volume of legal instruments processed by so-called "robo-signers," the agents that lenders employed to process foreclosure filings en masse without examining the underlying paperwork.
"The evidence a prosecutor would use is not in the possession of the prosecution," said one person familiar with the ongoing settlement talks.
In April, the five major banks involved, Bank of America (NYSE:BAC), JP Morgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and Ally Financial signed consent orders with federal bank regulators, promising to clean up bad practices. There was no admission or denial of any wrongdoing. How do you spell W-H-I-T-E-W-A-S-H?
If one doesn't look for crime it should be no surprise when no crime is found. The process is well known and is pictured below:
Servicer-Driven Foreclosures: The Perfect Crime? by Yves Smith
The Mortgage Mess by Yves Smith
The Alchemy of Securitization by John Lounsbury
ForeclosureGate Deal is a Cover Up by Michael Collins
We Must Prosecute Fraud by Washington’s Blog
Bailing Out Fraud William K. Black Interview
The Trillion Dollar Fraud by John Lounsbury
Daniel Tarullo – Problems in Mortgage Servicing by John Lounsbury