Fraudclosure: Will State AGs Step Up to Their Moment in History?

[unhappycamper]

Fraudclosure: Will State AGs Step Up to Their Moment in History?
Tuesday 02 February 2010
by: Mary Bottari | Campaign for America's Future | Op Ed

Rumor has it that the 50 state attorney general investigation into the Fraudclosure scandal is wrapping up. It's time for a backbone check. Will the state attorneys general just ask the big banks and service providers to turn over a chunk of change from seemingly bottomless pockets? (This strategy was pursued by the Security and Exchange Commission (SEC) with little impact). Or will Iowa Attorney General Tom Miller take the lead in wrestling a real settlement out of the banks so that families hammered by unemployment and underemployment can stay in their homes?

Americans know that the big banks and the mortgage service providers got us into this hole by pursuing an array of financial crimes. The SEC settlements alone have revealed a plethora of illegal, predatory and deceptive lending related to mortgages, securities fraud, accounting fraud, insider trading, brokerage fraud, bribery of government officials, criminal conflict of interest, deception of shareholders and investors, and more.

Now the "robo-signing" scandal is pulling back the curtain on Act II of this white collar crime spree -- revealing a new array of financial crimes by the very same institutions: robo-signing, fake witnesses, fake notaries, fake documents, fake attorneys, not to mention plain old theft as servicers rob consumers of hundreds or thousands of dollars in misapplied fees. There are additional crimes related to the way that banks have failed to correctly transfer promissory notes through the system and efforts to mislead and defraud investors. The short story is that many homeowners were foreclosed upon based on falsified documents by a bank who was not the true holder of the mortgage note. This is a crisis not only for individual homeowners, but investors who bought flawed mortgage-backed securities and for the financial system as a whole.

Perverse incentives on Wall Street allowed top executives to make more money on flawed loans than boring old 30-year mortgages. Even though there is widespread agreement that Wall Street's endless appetite for high-interest, high-fees loans to fuel the mortgage securitization machine had a causal role in supercharging the housing bubble, not one mortgage servicer provider or big bank CEO has been put in jail. This compares to over 1,000 successful prosecutions of top officers during the Savings and Loan crisis of the late 1980s.

While the SEC has been churning out fines resulting in a long list of "settlements", Wall Street firms are beginning to set aside money and treat these actions merely as the cost of doing business.

[Ichingcarpenter]

1. We need to outsource those Dept. of Justice jobs to

Iceland, India and Spain where their justice departments arrested the banksters.

[mdmc]

2. No.

action would help working people