Rotten to the core

Bill Black (h/t Lambert):

When you are told no one could see this crisis coming, ask them about the subprime crisis of 1990 to 1991. It’s a trick question. As all good things do in the world of fraud, this one started in Orange County, where you had significant people making liars loans. Now, remember, it is the lenders who put the lies in liars loans, not the borrowers. We know this empirically. And we stopped that—because it was insane—as regulators. And guess what happened? The leading folks making liars loans gave up their federal charter, gave up federal deposit insurance, and became a mortgage bank for the sole purpose of escaping regulation. And they changed their name. Some of you will recognize this name—to Ameriquest. Ameriquest was the leading predatory lender that in addition to making liars loans every day of the week targeted minorities to destroy that wealth you just heard about. They targeted Latinos, they targeted Blacks, and they were caught. They were caught three times doing this and the justice department refused to prosecute. Instead they settled for four hundred million dollars and guess what happened to the head of Ameriquest? Did he: a) resign in disgrace, b) was he indicted, or c) did we make him our ambassador to the Netherlands? Got it and won. How hard is this to figure out? Why do you think we made him our ambassador to the Netherlands? Because he was the leading political contributor to president of the United States of America. And that’s bad but what comes next is far worse. Remember, this is the most notorious fraud in the nation. It targets minorities. Everybody knows it does so. Two entities rushed to acquire these personnel and this business and their names—Citicorp and Washington Mutual—who become two of the most notorious frauds in all of this.

So timewise I’ll stop here but the case is, when we prosecuted, we had a ninety-percent conviction rate when they had the best criminal defense lawyers in the world and they spent money like water to protect the CEO from going to prison. So when they tell you no one can stop this, it is utter nonsense. I’ll leave you with these statistics: the FBI warned of this in September 2004. In open testimony, it warned expressly that there was an epidemic—I’m quoting—an “epidemic of mortgage fraud” and it predicted it would cause a financial crisis. If that’s not enough, the industry own anti-fraud experts in 2006, in writing, went to every mortgage banker in America and virtually every other lender and said three things: 1) stated income loans are an open invitation to fraudsters, 2) the incidence of fraud in such loans is 90%, and 3) these loans deserve the phrase—used by the industry behind closed doors—they are liars loans because they are pervasively fraudulent. How big did they get? Well, what did the industry do after it was warned? Did it stop making these loans? No! It massively increased the amount of these loans such that by 2006, one out of every three home loans in America was a liars loan. And that’s why we have a crisis and it came from the very top of these organizations, and it went through—as the FHFA said in its complaint—the largest banks in the world were endemically fraudulent. It is not a few rotten apples. It is an orchard of one percenters who are rotten to the core.

4 thoughts on “Rotten to the core

  1. Cass Sunstein is another Harvard knucklehead. Sunstein is also one of the most dangerous people in the Obama administration. If you want to know who neutered the EPA and who stopped most of the new regulations meant to rein in Wall Street, just look to Cass Sunstein. Check this asshole out.

  2. Ameriquest is responsible for the deaths of a couple of my father’s school chums, who got in over their heads and upon losing the ranch that had been in the family for three generations committed suicide.

    But wait! It get’s better, my brother the creationist freak (and who has never set foot in Oregon) was at the time employed by Ameriquest.

    I don’t think they, my brother included, should be prosecuted for fraud. I think they, my brother included, should be prosecuted for murder.

  3. I have been WAITING for someone to highlight the fact that the BANKS KNEW (THEY KNEW THEY KNEW) THEY WERE WRITING EXPLODING CONTRACTS AND BETTING ON THEM TO FAIL – when the bankruptcy laws were changed, I knew something was ROTTEN!

  4. I just left a comment about this over at The Diane Rehm Show site. The show was guest hosted by Susan Page, a most careful member of the MCM (Mainstream Corporate Media), and thus there was no push back on the AEI guy who kept pushing the rightwing’s Big Lie that the Big Meltdown was all due to poor people lying about their income to buy houses they couldn’t afford.

    Absolutely marvelous to find this here — and suggest Susan Page review her recent history….

    The other guests included Gretchen Morgenstern, but even she gave a nod to the gov’t forcing lenders to unwisely lending to poor people. Sheesh. The rest stopped short of saying the AEI guy’s contentions were BS — or ahistorical (aka lies).

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