The top regulator and prosecutor during the S&L crisis – professor of law and economics, Bill Black – explained at a recent TED talk that 90% of all no-document loans were fraudulent and 90% of appraisals were fraudulently inflated at the insistence of the banks. Government officials were informed about these fraudulent practices decades ago … and yet did nothing: In 2000 … the honest appraisers got together a formal petition, begging the government to act, and begging the industry to act, stop stop the epidemic of appraisal fraud [where the banks blacklisted honest appraisers who refused to fraudulently inflate the value of their appraisals.]. *** What about liar’s loans? That warning actually comes earlier …. in 1990 …. The Fed – and only the Federal Reserve – the explicit statutory authority to ban liar’s loans by every lender, whether or not they had federal deposit insurance. So what did Ben Bernanke and Alan Greenspan – as chairs of the Fed – do when they got these warnings that these were massively fraudulent loans, and they were being sold to due the secondary market? *** Greenspan and Bernanke refused to use the authority under the statute to stop liar’s loans. *** What about the response of prosecutors after the crisis? After $11 Trillion dollars in losses? After 10 million jobs [were] lost? A crisis in which the losses and fraud were more than 70 times larger than the Savings and Loan debacle? In the Savings and Loan debacle, our agency that regulated Savings and Loans – the OTS – made over 30,000 criminal referrals. Produced over 1,000 felony convictions just in cases designated as major. And that understates the prioritization, because we worked with the FBI to create a list of the top 100 fraud schemes – the absolute worst of the worst – nationwide. Roughly 300 Savings and Loans involved, roughly 600 senior officials. Virtually all of them were prosecuted. We had a 90% conviction rate. *** Fast forward to the current time. The same agency – Office of Thrift Supervision – which was supposed to regulate many of the largest makers of liar’s loans in the country has made … zero criminal referrals. The Office of Comptroller of the Currency – which is supposed to regulate the largest national banks has made zero criminal referrals. The Fed appears to have made zero criminal referrals. The Federal Deposit Insurance Corporation is smart enough to refuse to answer the question. *** We have zero prosecutions – [let alone] convictions – of any of the elite bank frauds, the Wall Street types, that drove this crisis. washingtonsblog/2014/03/30000-criminal-referrals-led-1000-felony-convictions-major-fraud-cases-sl-crisis-even-single-prosecution-today-even-though-2008-crisis-70-times-bigger.html
Posted on: Sat, 15 Mar 2014 17:56:52 +0000