By Michael Corkery
Don’t expect many fireworks from the Financial Crisis Commission today. Then again, it would be tough to match Wednesday’s showdown with Lloyd Blankfein.
This morning’s hearing included testimony from Eric Holder, the U.S. Attorney. And a couple of Holder’s statements caught Deal Journal’s attention. Holder said the Justice Department responded “aggressively” to the financial crisis.
His examples of this aggressive response: Convicting Bernard Madoff for the largest Ponzi scheme in history; investigating insider trading at hedge funds (the Galleon case); prosecuting money laundering at National Century Enterprises; and investigating 2,800 mortgage-fraud cases.
What is interesting about those examples is that most of them have little to do with what most believe were the causes of the financial crisis: the implosion of subprime mortages (and the securities based on them), risky bets on Wall Street backed by cheap debt.
Madoff’s crimes predated the credit boom by several years and were exposed only by last year’s swooning stock market. The Galleon case involved insider-trading tips about M&A deals earlier this decade, particularly at technology companies, which weren’t at the heart of the 2008 meltdown. And National Century Enterprises was a health-care-finance company located far from Wall Street in Dublin, Ohio.
As for the mortgage-fraud cases, many of 2,800 cases involve small criminal rings of mortgage brokers, home buyers and home builders acting in concert to defraud lenders, according to law-enforcement officials. While some of the DOJ’s probes have targeted large banks and housing companies, many of the cases don’t involve allegations of lenders duping unwitting home buyers.
One matter Holder didn’t mention was the case against two managers of Bear Stearns hedge funds that imploded amid the financial crisis. It is perhaps the closest we have seen to prosecuting Wall Street for wrong doing in the financial crisis. But the Justice Department lost, with the managers acquitted of all charges that they allegedly lied to investors about the funds’ mortgage investments.
Prosecutors are still probing fraud allegations at American International Group and a few other large financial firms. But so far, the Justice Department’s track record is less stellar than Holder made it sound.
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Predatory Lending is a major contributor to the economic turmoil we are currently experiencing.
Here is an example of what I am talking about:
Scott Veerkamp / Predatory Lending (Franklin Township School Board Member.)
Please review this information from U.S. Senator Jeff Merkley regarding deceptive lending practices:
“Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called Yield Spread Premiums, turned home mortgages into a SCAM.”
The Center for Responsible Lending says YSP “steals equity from struggling families.”
1. Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. 2. This is an average of $5,000 per loan. 3. The median value of the properties was $135,000. 4. Clearly, this type of lending represents a major ripoff for consumers.
http://merkley.senate.gov/newsroom/press/release/?id=A09C6A80-537A-4EB1-83C5-31925F046B6F
THE TRUTH ABOUT AMERICA!!!
http://www.AMERICAWAKEUPNOW.net