Lurid Subprime Scams Unveiled in Long-Running Fraud Trial

[unhappycamper]

http://www.rollingstone.com/politics/blogs/taibblog/lurid-subprime-scams-unveiled-in-long-running-fraud-trial-20131212



Household International, which was acquired by HSBC in 2002, was implicated in a major fraud case.

Lurid Subprime Scams Unveiled in Long-Running Fraud Trial
By Matt Taibbi
POSTED: December 12, 4:20 PM ET

Lost amid the hoopla over JP Morgan Chase's record-setting $13 billion settlement this fall was news of another monster court resolution – a $2.46 billion judgment, the largest ever awarded after trial in a securities fraud class action case, handed down in October against a HSBC acquisition called Household International.

It's an old case, with the trial completed way back in 2009 and the fraud in question having all taken place between 1997 and 2002. But it has crucial ramifications for the present, for one key reason:

The evidence uncovered in the Household suit should put to lie once and for all the oft-repeated idiotic myth – spread by many of America's most notable dumb people, from Rush Limbaugh to New York City Mayor-unelect Mike Bloomberg – that the financial crisis was caused by the government "forcing" banks to lend to poor people.

In reality, of course, the subprime bubble exploded because financial companies and banks were in a mad rush to get as many iffy borrowers into loans as quickly as possible – and not because they were forced to, but because they made assloads of money doing so.

[1StrongBlackMan]

1. I can't tell you ...

The evidence uncovered in the Household suit should put to lie once and for all the oft-repeated idiotic myth – spread by many of America's most notable dumb people, from Rush Limbaugh to New York City Mayor-unelect Mike Bloomberg – that the financial crisis was caused by the government "forcing" banks to lend to poor people.


how many times I've had that same argument ... even here at DU. The people pointing to the CRA, as "forcing" banks to lend to poor people, have no idea what they were/are talking about.

The argument fails because there's the timing problem - the CRA was in effect for almost 30 years before the melt-down - and all throughout that period, "CRA loans" performed on par ... actually a little better than "conventional" loans because of the underwriting standards.