Reply #28: FBI warns of mortgage fraud ‘epidemic’: Seeks to head off ‘next S&L crisis’ [View All]

[Demeter]

http://www.nakedcapitalism.com/2010/03/fbi-warns-of-mortgage-fraud-%E2%80%98epidemic%E2%80%99-seeks-to-head-off-%E2%80%98next-sl-crisis%E2%80%99.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Rampant fraud in the mortgage industry has increased so sharply that the FBI warned Friday of an "epidemic" of financial crimes which, if not curtailed, could become "the next S&L crisis."

Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions.

"It has the potential to be an epidemic," said Swecker, who heads the Criminal Division at FBI headquarters in Washington. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.

In the 1980s, many Savings and Loans failed because of poor management, risky loans and investments, and in some cases, fraud. Taxpayers were left with a $132 billion tab to cover federal guarantees to S&L customers.

This is the headline and first four paragraphs of a CNN article from 17 September 2004.

Where are the investigations, perp walks, convictions? So what happened to all that fraud?

It’s still ongoing.

* Short sale fraud
* Mortgage fraud indictments result from media investigation

Here’s the only investigation of a leading insider that I know about:

* SEC Press Release on Mozilo’s fraud and insider trading

But, that was June of 2009. Have you heard anything about this? I haven’t.

See Bill Black’s take on the fraud and the systemic response to it. You should note that, while the FBI was concentrated on criminal gangs outside of financial institutions, Black believes the problem is the collusion of the financial institutions themselves in the frauds. Obviously, in an environment that relies largely on self-reporting by regulated institutions, there is no incentive to report, if much of the criminal activity is within those institutions.

http://www.youtube.com/watch?v=sA_MkJB84VA&feature=player_embedded