Subprime or Subcrime? Time To Investigate and Prosecute...

[bridgit]

'Washington Post:

“Credit Crunch In U.S. Upends Global Markets

The turmoil in the U.S. credit markets turned global Thursday, prompting central banks in Europe and the United States to pump more than $150 billion into the financial system to keep it operating smoothly.”

The Sub-Prime Crisis Is Really A “Sub-Crime” Crisis. It Is Time To Investigate and Prosecute This Scandal.

There comes a time when the frame of a news story changes. It happened in Iraq when the “war for Iraqi freedom” became seen as a bloody occupation, not a beneficent liberation. It is happening as the war on terror is increasingly perceived as a war of error, and when voting problems are reframed as electoral fraud.

And it will happen in the economic arena too, when we see the “subprime” credit crunch for what it is: a sub-crime ponzi scheme in which millions of people are losing their homes because of criminal and fraudulent tactics used by financial institutions that pose as respectable players in a highly rigged casino-like market system.

Suddenly, after years of denial and inattention, the press has discovered what they call “the credit crisis.” Vague words like “woes” are still being used to mask a financial calamity that some analysts are already calling an apocalypse, as lenders go under and the Stock Market melts downs.'

http://www.smirkingchimp.com/thread/9286

[Yael]

1. There is nothing to prosecute

Just like Enron. What they were doing was given the holy water blessing by the SEC. It wasn't until after the house of cards fell that Sarbanes and Oxley put up legislation to stop that particular brand of accounting practice. (It was marking to market current earnings based on future projections and offloading debt to shadow entities).

We have SOX compliance as law today because of that to ensure disclosure on financials.

The sub-prime market wasn't doing anything illegal -- they just saw a niche (read: a way of turning a profit) that the market found buyers for so they went for it. Now, we are all going to pay for it.