Posts
Talk about a nation of comedians (caught unawares undoubtedly), but real jokers nevertheless.
FBI Brags About Chasing Down Mortgage Fraudsters But Big Banks Are Left Untouched
By Ben Hallman and Michael Hudson
In a new report, the Federal Bureau of Investigation pats itself on the back for using “sophisticated investigative techniques” to target mortgage fraudsters. The FBI’s 2010 “Year in Review” mortgage fraud report says the agency has used wiretaps, undercover operatives and “tactical analysis coupled with advanced statistical correlations and computer technologies.”
Not everyone is impressed.
Consumer advocates say the FBI is missing the big picture, focusing its investigative muscle on small-time crooks and turning a blind eye to misconduct by big banks.
While millions of homeowners have been put at risk by dishonest tactics used by the mortgage industry, these advocates say, the FBI has targeted low-level lender employees and street-level fraudsters.
Richard Eskow, a senior fellow with the Campaign for America’s Future, a progressive think tank, calls the new report the latest example of the “pseudo-investigatory approach” of the FBI, the Justice Department and the Obama administration in the aftermath of the mortgage meltdown.
“The only thing worse than doing nothing is to do what they've done―try to hoodwink the public into thinking they're doing something,” Eskow told iWatch News.
The Obama administration, Eskow claims, has taken the view that the nation’s largest banks are too important to the economy to be threatened by criminal investigations and indictments. “Too Big to Fail,” he says, also means “Too Big to Jail.”
A telephone call to the White House press office Monday afternoon wasn’t immediately returned.
The FBI did not immediately respond to a request for comment from iWatch, but said in its report that it has “continued to dedicate significant resources” to the threat of mortgage fraud.
“The FBI continues to enhance liaison partnerships within the mortgage industry and law enforcement,” the report says. “As part of the effort to address mortgage fraud, the FBI continues to support 25 mortgage fraud task forces and 67 working groups.”
There were 3,129 pending mortgage fraud investigations in fiscal year 2010, a 12 percent increase from 2009 and a 90 percent increase from 2008. According to FBI data, 71 percent of all pending investigations involved dollar losses of more than $1 million.
The FBI offices most active in investigating mortgage fraud were Las Vegas, Los Angeles, New York, Tampa, Detroit, Washington, Miami, San Francisco, Chicago, and Salt Lake City, the agency said.
The report says mortgage fraudsters “recruit people who have access to tools that enable them to falsify bank statements, produce deposit verifications on bank letterhead, originate loans by falsifying income levels, engage in the illegal transfer of property, produce fraudulent tax return documents, and engage in various other forms of fraudulent activities.”
Suspicious Activities
One source of information that the FBI uses to launch investigations are Suspicious Activity Reports, or SARs, filed when a financial institution sees suspicious behavior or patterns of questionable transactions. The Financial Crimes Enforcement Network, or FinCEN, an arm of the Treasury Department, tallies the reports. While SARs are far from a guarantee that a crime has taken place, their numbers are considered important indicators of trends. As iWatch News previously reported , the increase in SARs could be leading to more mortgage fraud investigations.
There were 70,533 mortgage fraud-related SARs in 2010, a 5 percent increase from 2009. Those reports revealed an estimated $3.2 billion in losses, a 16 percent increase over the previous year.
In June 2010, the FBI and the Department of Justice announced a mortgage fraud takedown referred to as Operation Stolen Dreams. The sweep targeted mortgage fraudsters throughout the country and was the largest collective enforcement effort ever brought to bear in combating mortgage fraud, the agency said.
Operation Stolen Dreams involved 1,215 criminal defendants and included 485 arrests and 336 convictions. The defendants were allegedly responsible for more than $2.3 billion in losses.
Diane Thompson, an attorney with the National Consumer Law Center, a nonprofit based in Boston, said the FBI usually operates under the assumption “that lenders lose money when fraud happens.” But, she said, the truth is that lenders often profit from fraud by fooling borrowers into paying too much for their loans and by using inflated appraisals and other dishonest tactics to pump up their loan volume.
Thompson said the FBI’s annual mortgage fraud report is useful in providing a sense of how common low-level fraud is, but “it doesn’t look at any of the macro questions. It doesn’t get at how systemic fraud is. At what level is fraud being facilitated, encouraged or condoned by large institutions?”
Thompson and other critics say the FBI’s focus on individual wrongdoers or cliques of fraudsters allows big lenders to argue that they’re victims of “rogue employees” or, in worst case scenarios, “rogue branches.”
Ameriquest Capital Corp., the nation’s largest subprime lending empire at the height of the boom, agreed to pay a $325 million mortgage fraud settlement in 2006 after an investigation by state banking regulators and attorneys general around the nation. The state authorities accused its Ameriquest Mortgage subsidiary of using bait-and-switch salesmanship, inflated appraisals and other deceptions to rip off homeowners.
Executives at Ameriquest, which stopped making loans in 2007, blamed any problems on a handful of renegade employees. The FBI investigated fraud cases that resulted in convictions of low-level Ameriquest workers, but didn’t press cases higher up the corporate chain.
John Taylor, executive director of the National Community Reinvestment Coalition, a nonprofit based in Washington, believes that “bigger lenders hide behind loan officers who they compensate with a salary structure that rewards aggressive lending behavior that produces big volume and highly profitable loans.” When these loan officers are caught in wrongdoing, Taylor says, the banks say they were “renegade loan officers” who “weren't following guidelines.”
This is a smokescreen, he says, “given that these loans are all computerized and heavily documented” so that everyone from the loan officer to managers know exactly what each employee and branch office is doing.
Sending a message.
The Obama administration’s efforts to portray itself as tough on financial crime have been the subject of debate.
The Justice Department told the New York Times earlier this year: “The Department of Justice is aggressively pursuing financial fraud cases throughout the country, including hundreds of defendants charged with investment frauds and Ponzi schemes, securities and commodities fraud, insider trading, mortgage fraud, bank fraud and other schemes.”
Tom O’Keefe, president of the National Association of Investment Professionals, told iWatch News on Monday that the Department of Justice prefers to “go after the ‘little people’ who don't have the resources and knowledge to defend themselves. This allows the DOJ to say they did something and not ruffle the feathers of the powerful on Wall Street.”
Along with Operation Stolen Dreams, which focused on mortgage fraud, the government also embarked last year on an initiative it called Operation Broken Trust, a crackdown on investment fraud that it said had resulted in criminal and civil actions against hundreds of wrongdoers who had cost their victims billions in losses.
In announcing the results of Operation Broken Trust in December, U.S. Attorney General Eric Holder said the government was “sending a strong message” that “cheating investors out of their earnings and savings is no longer a safe business plan ― we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”
Consumer advocates and media organizations quickly poked holes in the data.
The New York Times reported that the success of the operation was “something less than it appears. Some of the cases were initiated before the Obama administration took office. Others got under way before President Obama created . . . the Financial Fraud Enforcement Task Force in November 2009, and many of them were well on their way to completion by the time the task force began its crackdown on Aug. 16.”
The Times noted that the government’s statistics also included “considerable overlap of criminal and civil cases, which results in double-counting of many of the defendants, losses and victims.”
In the news release outlining the successes of Operation Broken Trust, Robert Khuzami, the Securities and Exchange Commission’s enforcement director said “fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees. Victims want justice and don’t much care who the fraudster is or how unique the fraud.”
The Banality of Goldman Sachs
Sometimes we need to look at what the financial system has become. It seems that what was once considered corrupt, illegal, unethical and immoral in business practices (to be eschewed) is now commonplace and acceptable as part of the capitalistic system.
It is now acceptable to participate in practices that were once thought of as unfair. It is now normal to become conspicuously wealthy by defrauding the unwary investor by means of mortgage-backed securities that were fraudulently labelled safe.
It is an organized and acceptable practice to bet on the failure of mortgage-backed securities: Goldman Sachs made money through fees then made even more money by betting against those same securities. It is now considered normal every-day behavior to treat greed as a routine way to accumulate wealth.
It is all right for small acts of corruption to go unpunished when a very large number of people practice them. Not one executive of GS has been criminally prosecuted for its unethical practices. It is now okay to prey upon others in order to transmit wealth from the many to the few at the top.
Bailouts of banks are now considered commonplace and a good way to forgive the debts of banks but it is less likely that foreclosed homeowners will ever have their debts forgiven. It has become normal business practice for Goldman Sacks to set aside $3.4 billion for taking care of future lawsuits. What appears trivial to Goldman Sachs is devastating to those seeking redress from the effects of GS power and wealth.
Short selling is a normal way to conduct financial business even when it destroys the very same banks practicing it! We are now participating in a new normal where Goldman Sachs's survival as a bank is more important than the individuals that suffered great losses because of GS frauds, frauds that have been laid out in this blog.
No wonder there is no confidence in the now much-enriched (but poor-little-rich-loser) banks as Robert Lenzner's article describes it below:
The Battered Investment Class Has No Confidence in Markets, Companies, Banks, Governments
Robert Lenzner - Forbes
Over the past ten years investors have been battered by the dotcom bubble(off over 50%), 9/11 (off over 25%), the credit crisis bubble(off 50%), the crash of commodities (down 25%) and now the government debt downgrade together with a dire European sovereign debt crisis (down 20-25%). Nor have we ever gotten back to the all-time peak of the Dow Jones industrial average of 1410, set in October, 2007. It’s no surprise that investors are fleeing equity mutual funds and shoved $50 billion of their savings in money market funds yielding zero last week.
Zero is once again again preferable to losing money.
Just last week trading volume doubled to 13 billion shares daily as volatility was King; down 634.76 on Monday; up 429.92 on Tuesday; down 519.83 on Wednesday and up 422 on Thursday. This kind of record trading volume plus volatility can only have been the result of extraordinary high frequency trading by computer and the quant hedge funds, going in and out of Apple and IBM and big bank shares dozens of times a day.
. . . .
Every day there is another government investigation or law suit against Goldman Sachs, Citigroup, Bank of America, or JP Morgan. Every day there are unconfirmed rumors about giant international banks in Europe like Societe Generale. Fear runs rampant, causing the ban on selling short bank shares in Europe. Margins have been raised on the speculation in gold. The panic is so powerful that investors are pushing up Treasury bond prices as they rush into the safe confines of Uncle Sam – the gentleman who just had his credit rating lowered.
Read the article here.And there seems no therapy or cure for this intense post traumatic stress syndrome to finance capitalism. You better pray there’s no hard landing coming for China.
And if you think that was rough, wait till you sink into the exquisite prose of the Regressive Antidote and he scores the winning goal by denoting that our country is run by a bunch of "middle-aged babies" lunging for another "poisoned lollipop." My take on what's happened under these progressive pretenders comes from a slightly different place in that I don't believe that Obama just wanted the cool kids to ask him inside while he was busy swinging on the tire in the backyard (as Dr. Green does). I think he's already been asked inside (in a big way) by the big boys, but he's been offered a bonus for continuing to swing on the tire and whinge at his benefactors whenever he gets tired of swinging and is a little thirsty. (Anyone else notice this phenomenon?)
Really, you have to give this country credit where credit is due. No contemporary developed nation in the world can touch us where political stupidity is concerned. We’re the best at that! American exceptionalism, man! Take that, you cheese-eating European socialists!
Having repudiated the rampant regressivism of the last president – a shit-kicker Texas Republican governor who made his bones frying people on death row – and having spent four years with more of precisely the same politics (except with much more niceness) from our present Social Worker-in-Chief, we are now very likely to turn again next to an even more radical version of the Bush debacle, that being the current shit-kicker Texas Republican governor, Rick Perry.
I mean, it all might even have a certain entertainment value to it if Americans had any sense of irony whatsoever. Alas, that is far from the case, and this will all somehow make perfect sense to voters in 2012. The Democrat who governs like a Republican couldn’t do squat to fix the crises created by the Republicans, so we’ll need to get an even more Republican Republican in there to do it right! Far, far right.
I have to confess that I am deeply despondent about politics today, in a way I don’t remember feeling, even during the ugliest days of George W. Caligula. It was awful then, but those actions and ethics were only a natural extension of what had already been going on within the GOP for twenty years. Each successive wave of thuggish animals was uglier than the last (as continues to be the case today), from Reagan to Gingrich to Bush.
The Obama presidency, on the other hand, has been crushing to the spirit, and more so because even disappointed liberals still don’t get it, thinking he’s a wimp or a lousy poker player, when in fact he is – like Clinton before him – just another kleptocrat, come to sell out not just the country, but also the ideology of liberalism and the political party which once embodied those principles.
That’s quite a trifecta, really. Most horror story politicians would be satisfied just to wreck their country in the name of personal narcissism. Obama is additionally destroying a set of crucial and hard-won ideas along with a political party in the bargain.
He is the anti-FDR in every meaning of that term. FDR saved the country. Obama is burying it. FDR created the Democratic Party as we (used to) know it, once probably the most formidable political machine in American history. Obama is dragging it curbside. FDR gave America its social contract. Obama is dismantling it. FDR reveled in the hatred of the greedy thuggish scum who despised him. Obama keeps hoping they’ll like him and invite him over for a beer if only he lets them pass his limp body around the jail cell one more time. FDR was America’s greatest president. Obama is undoubtedly one of its worst.
This cuts deep, man. Perhaps I should have been used to it after eight years of Clinton (whose adoration to this day by Democrats is a thing of sad wonder and another unrelenting source of despondency) and the absolute nothingburgerness of Nancy Pelosi and crew following the 2006 election.Just the same, I’m having an “Et tu, Brute?” moment as I watch the complete sell-out of 300 million people by a handful of traitors. I’ll give Obama credit for achieving one goal, though. This is a truly bipartisan act of treason. Good for him. Working together with Republicans seems very important to this president.
Meanwhile, though, what is there to do, say and think when the avenues for seeking solutions – hell, even for just ending our suicidal tendencies – all seem to be closing up at once, and every iteration of American politics is about losing more of what matters? Like I said, it’s getting harder and harder to have hope, and even to care. I guess at some point if stupid people want to do stupid things to themselves, you gotta let them. I kinda wish the rest of us weren’t dragged down the toilet with them, though. That’s just rude.
It’s even tempting to think that a Republican sweep in 2012 would be good for the country. Since conservative prescriptions can only continue the destruction they’ve begun, perhaps this disaster could mark the repudiation of the ideology forever. ‘Course, that’s what some of us thought in 2008, and now it is only worse. Far worse. Who could have imagined that, after a decade of Bush, regressivism and disaster that two years later the right would be back with the tea party and stronger than ever? Kafka? Dali? Timothy Leary?
The most disheartening thing about the American political condition is the degree to which people don’t get what has happened to them, and still continues to happen, destroying the body politic. It’s as if you were staring at an x-ray of a giant tumor in your belly, and nevertheless still sat there in befuddled consternation, wondering what the hell was making you feel so ill.
It’s as if you then thought to yourself, “Oh, what the hell, I guess I’ll just drink a keg or two of this here Tumor Growth Potion. Maybe that will cure me.” In the latest sign of this diagnostic idiocy, voters in Wisconsin this week had the opportunity to respond to the tumor that is their Republican governor, through the mechanism of recall elections. The results were hardly a ringing endorsement for sanity, or even self-protection from the predators for whom Scott Walker and his party (as well as most of the other party) shills. That’s really depressing.
What is most disheartening is that Americans don’t even understand the experiment they’ve been subjected to these last thirty years. They seem to get the fact that it has failed, but they don’t know what “it” is. How many people know that regressives have won more or less every single economic policy battle of the last three decades, from taxes to trade to labor relations to deregulation to privatization to subsidies and beyond?
How many Americans know this? How many know, to simply choose the most obvious example (but the same logic applies across the board), that taxes are far lower in America today than they have been for almost a century? And how can they possibly reject this regressive experiment in political economy if they don’t even know that it has been conducted?
One reason they don’t know, of course, is that nobody is telling them this. Sure, there are a couple of real liberals in Congress and even a socialist senator. But the real truth is that there is absolutely no left in America today, as a serious political movement. None. Liberalism hasn’t had a real voice in America for thirty years, perhaps forty.
What we have today, instead, is an insane tea party right, whom people like Eisenhower would have utterly abhorred. Then we have the ‘mainstream’ GOP, like John Boehner, who are simply yesterday’s regressive tea party revolutionaries, and who therefore look moderate only through (faux) comparison to the Michele Bachmanns and Allen Wests of this world.
Then you have the so-called ‘centrist’ or moderate Democrats in Congress, who can always be relied upon to provide any non-GOP votes necessary to stuff the plutocratic stocking with Xmas gifts, not to mention the one in the White House who signs the bill a day or two later.
Finally, there are the Nancy Pelosis and Chuck Schumers of our political firmament, whose job it is to provide the image of an opposition to oligarchy and the military-industrial complex. “We’ll shut down the war as soon as we get control of Congress”, they say. Until they actually do win majorities, that is, when it becomes, “Oh, did we say that?”
And so on. Like I said, there is no one out there – and hasn’t been for over a generation – who is leading the progressive charge, or even trumpeting the liberal narrative, to counter the absurdly manifest lies of the right. Fox News only makes sense if you’re stupid.
Similarly, more tax cuts for billionaires as a solution to an economy and a federal budget wrecked by tax cuts for billionaires only makes sense if no one else is out there pointing out that this particular imperial monarch is standing before us buck naked (if you catch my drift). I wouldn’t mind quite as much that my country was committing national suicide if I thought that was the intention. In fact, it’s more like murder by giving poisoned lollipops to middle-aged babies who gleefully grab for them. Hence my despondency.
If there is a small ray of hope out there, it is that more people are beginning to catch on. There has been a large spate of articles in the media lately with the theme of Obama’s complete ineptitude and insignificance as a serious political force.
Liberals are by and large finally, amazingly, beginning to understand that he is not a liberal champion by any stretch of the imagination. That’s progress, at least, over reading for the last two years that Obama is a liberal or socialist or has a far-left agenda. What sickening, Orwellian, bullshit that is. Sadly, however, while commentators and the voting public are starting to recognize that Obama is not one of us, they have not yet realized the full truth, which is that he is one of them.
As if somebody else picked Larry Summers and Tim Geithner and Bob Gates to serve in his cabinet. As if someone else decided to bail-out Wall Street while doing nothing about jobs or mortgages. As if there was another guy in the White House who tripled American forces in Afghanistan, or maintained Guantánamo in its fully operational state. This is what is, ultimately, so sickening about our current political condition. As a country, we don’t even know what it is.
If there is another slightly larger ray of hope on the horizon, it is the premise that there is a breaking point out there somewhere. We’re seeing it in Israel (though, of course, the US media declines to cover the story), where huge swaths of the population have been on the streets protesting against – not Palestinians – but rather plutocratic plundering and the diminished lives it has left them with. We’ve seen that right across the Arab Spring countries, and in Greece and Britain.
Just the other day someone correctly noted that, “There is no excuse for violence, no excuse for looting, no excuse for thuggery, and those who are responsible must know that they will be brought to justice. I think this is about sheer criminality.”
I couldn’t agree more, except that I was thinking it applies to the greedy bastard thugs whose sheer criminality, looting and – yes – violence has brought the world’s economy to its knees, rather than to the response to that on the streets of London, which was what Tory Home Secretary Theresa May meant when she made that comment. In any case, maybe we’re seeing the beginnings of the breaking point. Perhaps people are at last starting to say Basta! to impoverishment of the many in order to serve the greed of the few.
Maybe such restored political nobility will even come to America.
Maybe it isn’t the entire human species that tramples on nobility in its grubby pursuit of greed, but just Homo Sapien Americanus.
Maybe.
__________________
No comments:
Post a Comment