The FBI’s 2010 Mortgage Fraud Report Reveals Why the Banksters Love Holder

[Octafish]

William K. Black
The Real News, WEDNESDAY, 14 AUGUST 2013 08:31

The Obama administration’s continuation of the Bush administration’s refusal to prosecute the elite banksters (or even the vastly lower status CEOs of the fraudulent mortgage bank) that drove the crisis has made it clear that the rule of law no longer applies to wide ranges of life and that crony capitalism will continue to reign.

One of the difficulties we have is that because the last two administrations have fanatical devotees of the cult of the Virgin Crisis – the myth that the ongoing crisis was the first in modern times conceived without sin (control fraud) – that it is exceptionally difficult to know what their creed is. DOJ has refused to prosecute any elite banker for mortgage loan origination fraud. The rare prosecutions it has brought against senior officials of fraudulent loan originator (a large, but obscure regional mortgage bank: Taylor Bean) did not prosecute the officials for their fraudulent origination (or sale) of loans. They Taylor Bean officials were only prosecuted for their fraud against the TARP program – and only because Neil Barofsky (SIGTARP) made the criminal referral about that fraud and pushed relentlessly to force the Department of Justice to prosecute. With zero prosecutions of the massively fraudulent home lenders that drove the crisis to we are left with no information on why committing hundreds of thousands of frauds via the twin epidemics of loan origination fraud (inflating appraisals and making endemically fraudulent “liar’s” loans) is no longer a crime that the FBI investigates and DOJ prosecutes. No senior DOJ or FBI official, of course, is stupid enough to state openly why we no longer prosecute even the CEOs of long-bankrupt mortgage banks that led these accounting control frauds. The U.S. Attorney for Sacramento, one of the epicenters of accounting control fraud, was foolish enough to attempt to explain why he did not investigated or prosecute the banksters:

Benjamin Wagner, a U.S. Attorney who is actively prosecuting mortgage fraud cases in Sacramento, Calif., points out that banks lose money when a loan turns out to be fraudulent. “It doesn’t make any sense to me that they would be deliberately defrauding themselves,” Wagner said.

http://www.huffingtonpost.com/2010/05/03/too-big-to-jail-executive_n_561961.html

Wagner’s inability to keep his pronouns straight even when they were in the same sentence – “they” refers to the CEO, “themselves” refers to the bank the CEO is looting – was so embarrassing that he did not even try to respond to his critics. With no indictments of the bank CEOs for loan origination fraud and no statements by senior DOJ leaders about why they refuse to prosecute the leaders of the accounting control frauds that drove our last three major crises we are forced to guess at what went wrong at the FBI and DOJ.

CONTINUED...

http://therealnews.com/t2/component/content/article/75-william-black/1692-why-are-appraisers-furious-at-fraud-by-their-peers-while-corporate-lawyers-are-complacent#.UguyGNIp92A

PS: Dr. Black investigated the S&Ls as a forensic economist and helped put a lot of crooks behind bars. He says we could do the same for the Banksters, if only we wanted.

[Scuba]

1. But the banksters didn't break any laws at all. I read that right here on DU.

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=3455454

[Octafish]

6. That is an amazing thing, Stockholm Syndrome.

Geithner channels Greenspan and Airbrushes Fraud out of our Crises

By William K. Black
New Economic Perspectives, posted on April 30, 2012 by Stephanie Kelton

On April 25, 2012, Treasury Secretary Geithner made remarkable statements about the role of elite financial fraud and greed in producing our recurrent, intensifying financial crises. In this first installment I focus on the first of five problems with Geithner’s claims: (1) he does not understand the causes of prior crises, (2) he does not understand the causes of the ongoing crisis, (3) he does not understand that if he were correct about the first two points our nation would be in even greater peril and the urgency of Geithner leading a radical transformation of finance and regulation would be greater still, (4) he is not correct that we are prosecuting the elite criminals who drove the ongoing crisis, and (5) the media continues its nine-year pattern of failing to challenge Geithner’s fictions and his failures to lead the radical transformation that he should be desperately seeking given his stated beliefs about the causes of financial crises.

Here are the specifics of what Geithner said about financial crises, fraud, and greed.

SNIP...

Geithner’s first claim is that “most financial crises” are caused by non-criminal acts. “Stupidity” is the lead cause of financial crises, compounded by “risk-taking and greed and recklessness.” [font color="blue"]Fraud does not even make Geithner’s list of contributing factors to financial crises. The U.S. has experienced three recent financial crises – the S&L debacle (which is the subject of this first installment), the Enron era frauds, and the ongoing crisis. Accounting control fraud is the leading cause of each of the crises. [/font color] “Control fraud” is the term white-collar criminologists use to refer to frauds in which the person controlling a seemingly legitimate entity uses it as a “weapon” to defraud. Accounting is the “weapon of choice” for elite financial frauds. Control frauds cause greater financial losses than all other forms of property crime – combined.

Three preliminary comments are in order. First, Geithner was selected to be the President of the Federal Reserve Bank of New York (FRBNY) in 2003. The President of the FRBNY has the second most important position in the Federal Reserve System. It is essential that the FRBNY President study and understand the causes of financial crises. Geithner had ample time and incentive to conduct such a study. Second, no one challenged Geithner when he (implicitly) claimed that fraud was not even worthy of mention or consideration as a contributor to financial crises. Third, even if Geithner were correct that fraud was only a relatively small contributor to the Great Recession that would provide no basis for not prosecuting the elite frauds who made that illegal contribution.

It is useful to expand slightly on the second point. No one appears to have asked Geithner how he came to believe that “stupidity” is the primary cause of financial crises. I am flabbergasted at the claim. The individuals who are principally responsible for the crisis (whether due to their stupidity or fraud) are the CEOs of the largest financial institutions who made, purchased, pooled, and resold as collateralized debt obligations the pervasively fraudulent liar’s loans that drove the crisis. The enormous extent and growth of liar’s loans and their endemically fraudulent nature is not in dispute. The green slime that drove the crisis is not at issue. The only issue is why the CEOs made and purchased vast amounts of loans they were repeatedly warned were fraudulent and sure to cause catastrophic losses as soon as the housing bubble stalled. [font color="blue"]Assume solely for the purposes of analysis that Geithner is correct that they did so because of stupidity rather than fraud. That assumption requires the CEOs of Countrywide, Ameriquest, Indymac, WaMu, Fannie, Freddie Mac, Fannie Mae, Lehman, Bear Stearns, Merrill Lynch, Wachovia, Bank of America, Citicorp, and all the largest mortgage banks to have been terminally “stupid.” [/font color] It also requires the boards of directors of each of these entities to have either been so stupid that they failed to notice that the CEO was stupid or so devoid of integrity and respect for their fiduciary duties that they were indifferent to their CEO’s stupidity. Geithner’s assertion also requires that the regulators to have been so stupid or so insipid that they could not recognize that the CEOs were terminally stupid or so indifferent to their oaths of office that they did not object to stupid CEOs running the largest financial organizations in the United States. Since Geithner dealt personally with these CEOs, his assertion, if true, would require him to either be stupid or indifferent to his oath of office.

That’s a lot of abject stupidity among the most elite CEOs – drawing an average salary of about $10 million annually in compensation for their stupidity. The boards, the regulators, the media, and shareholders are incapable of recognizing the CEOs stupidity. Everyone suspended disbelief and emulated the fools in the movie “Being There” who treated Peter Seller’s character’s (Chance the Gardener’s) inane ramblings as profound pearls of wisdom. If Geithner is correct, big bank CEOs never shave with Occam’s razor – and stupidity is omnipresent in the C-suites. Geithner also doesn’t seem to view it as particularly alarming that many of most elite CEOs are paid hundreds of millions of dollars as rewards for their surpassing stupidity.

[font color="blue"]Geithner does not reveal, and the media lacked the curiosity to ask, how he determines the answers to questions as essential to the performance of his duties as “why are we suffering recurrent, intensifying financial crises?” [/font color] I will explain how I approached that question when it was essential to the performance of my duties upon becoming an S&L regulator on April 2, 1984. I decided that it was critical to study what was causing over one S&L per week to fail. I was the newly minted Litigation Director of the Federal Home Loan Bank Board (Bank Board) and every failure came across my desk so that I could (1) prepare to defend a legal challenge to our placing failed S&Ls in receivership and (2) determine whether we should sue the failed S&L’s officers, directors, and professionals because acted negligently or fraudulently. We called the process the “autopsy” and I was the “chief coroner.”

CONTINUED...

http://neweconomicperspectives.org/2012/04/geithner-channels-greenspan-and-airbrushes-fraud-out-of-our-crises.html

PS: Amazing thread, that one in your post. Thanks for fighting the good fight, Scuba. Every day, integrity seems to become more and more of an alien concept.

[Ichingcarpenter]

2. Holder's 1999 Memo Helped Set The Stage For 'Too Big To Jail'

Eric Holder's 1999 Memo Helped Set The Stage For 'Too Big To Jail'

http://www.huffingtonpost.com/2013/06/04/eric-holder-1999-memo_n_3384980.html

[Octafish]

7. Gee. That's a lot of Joementum.

Eric Holder's 1999 Memo Helped Set The Stage For 'Too Big To Jail'

Jillian Berman
Huffington Post, posted: 06/04/2013 4:56 pm EDT | Updated: 06/04/2013 5:01 pm EDT

EXCERPT...

Adora Andy Jenkins, a Justice Department spokeswoman, wrote in an email to The Huffington Post that under Holder's leadership, "this Justice Department has stood firm in our approach that no person and no corporation is above the law."

In 1999, Holder highlighted the possibility of deferred prosecution -- an arrangement now common in the wake of the financial crisis -- whereby prosecutors essentially give defendants amnesty in exchange for paying a fine, enacting reforms and cooperating with investigators. But later officials published further memos, turning the option into more of a recommendation, Coffee said.

He said the policy was strengthened in response to the Arthur Andersen scandal of the early 2000s. After the government brought criminal charges against the consulting firm, the company failed, causing 28,000 workers -- many of whom likely had no role in any wrongdoing -- to lose their jobs. A court later overturned the charges.

Holder told the Wall Street Journal in 2006 that he drafted the memo in response to complaints that there seemed to be no uniform rules for deciding whether to bring charges in corporate cases.

&quot I) didn’t expect these issues would become as big as they were," Holder told the WSJ at the time. Indeed, they've only grown larger in the seven years since that interview, as the financial crisis wreaked havoc on the U.S. economy.

CONTINUED...

http://www.huffingtonpost.com/2013/06/04/eric-holder-1999-memo_n_3384980.html

Remember when the ENRON thing exploded, one Joe Lieberman helped us find our way out of without sullying any reputations:

Lieberman in Enronland

It has come to this: The investigation of Enron as a political scandal appears for now to depend on Senator Joseph Lieberman, an Enron Democrat who bagged Enron campaign contributions and who worked hard to block accounting reforms. Lieberman's committee agreed to issue subpoenas seeking information that could shed light on Enron contacts with the White House, but the question is, How hard is he willing to push?

CONTINUED...

http://www.thenation.com/article/lieberman-enronland#

Memos and laws like blueprints and passports to the lands of green and money, the Cayman Islands and Switzerland.

[JDPriestly]

3. K&R.

The NSA hands information on electronic communications over to the DEA to stop drug crime.

Why didn't they give the FBI, the SEC and other financial regulators information to the INTERNATIONAL crime going on in the derivatives and mortgage markets?

I'll bet you the number of incriminating e-mails and phone calls in that information would be quite surprising.

By their e-mail addressees ye shall know them.

[pscot]

4. This is so unfair

The DOJ has been jailing loan officers from California to Maryland. And look what they did to that guy who blew the whistle on UBS.

[soryang]

5. Rahm was on the Board of Fannie Mae when the MERS scheme...

...was being carried out by the big banks to avoid state recording laws and evade state and local taxes. When judges started throwing foreclosure suits out of court for failure to document succession of interest in title, the big banks began forging false transfer documents and systematically committing fraud on the courts. The country is run by criminals and Fannie Mae and Rahm participated in it.