More Bankers Convicted….

[Frikki]

Here I think is a balanced opinion piece weighing the question of prosecutions: http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executive-prosecutions/

This part is perhaps the truth to the matter:

On the one hand, the government, writ large, had a part in creating the conditions that encouraged the approval of dubious mortgages. Even before the start of the housing boom, it was the government, in the form of Congress, that repealed the Glass-Steagall Act, thus allowing certain banks that had previously viewed mortgages as a source of interest income to become instead deeply involved in securitizing pools of mortgages in order to obtain the much greater profits available from trading. It was the government, in the form of both the executive and the legislature, that encouraged deregulation, thus weakening the power and oversight not only of the SEC but also of such diverse banking overseers as the Office of Thrift Supervision and the Office of the Comptroller of the Currency, both in the Treasury Department. It was the government, in the form of the Federal Reserve, that kept interest rates low, in part to encourage mortgages. It was the government, in the form of the executive, that strongly encouraged banks to make loans to individuals with low incomes who might have previously been regarded as too risky to warrant a mortgage.

Thus, in the year 2000, HUD Secretary Andrew Cuomo increased to 50 percent the percentage of low-income mortgages that the government-sponsored entities known as Fannie Mae and Freddie Mac were required to purchase, helping to create the conditions that resulted in over half of all mortgages being subprime at the time the housing market began to collapse in 2007.

It was the government, pretty much across the board, that acquiesced in the ever-greater tendency not to require meaningful documentation as a condition of obtaining a mortgage, often preempting in this regard state regulations designed to assure greater mortgage quality and a borrower’s ability to repay. Indeed, in the year 2000, the Office of Thrift Supervision, having just finished a successful campaign to preempt state regulation of thrift underwriting, terminated its own underwriting regulations entirely.

The result of all this was the mortgages that later became known as “liars’ loans.” They were increasingly risky; but what did the banks care, since they were making their money from the securitizations. And what did the government care, since it was helping to create a boom in the economy and helping voters to realize their dream of owning a home?

Moreover, the government was also deeply enmeshed in the aftermath of the financial crisis. It was the government that proposed the shotgun marriages of, among others, Bank of America with Merrill Lynch, and of J.P. Morgan with Bear Stearns. If, in the process, mistakes were made and liabilities not disclosed, was it not partly the government’s fault? One does not necessarily have to adopt the view of Neil Barofsky, former special inspector general in charge of oversight of TARP, that regulators made almost no effort to hold accountable the financial institutions they were bailing out, to wonder whether the government, having helped create the conditions that led to the seeming widespread fraud in the mortgage-backed securities market, was all too ready to forgive its alleged perpetrators.

Please do not misunderstand me. I am not suggesting that the government knowingly participated in any of the fraudulent practices alleged by the Financial Inquiry Crisis Commission and others. But what I am suggesting is that the government was deeply involved, from beginning to end, in helping create the conditions that could lead to such fraud, and that this would give a prudent prosecutor pause in deciding whether to indict a CEO who might, with some justice, claim that he was only doing what he fairly believed the government wanted him to do.

Crimes are crimes even if people think the Gov wants them commited. Take it to trial and see if you get a conviction.

 

[Harry Bosch]

Are you dyslexic? I seem to remember you were a banker.

Yep, I'm a banker. I suppose you want me to be investigated?

 

[laughing dog]

Here I think is a balanced opinion piece weighing the question of prosecutions: http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executive-prosecutions/

This part is perhaps the truth to the matter:

On the one hand, the government, writ large, had a part in creating the conditions that encouraged the approval of dubious mortgages. Even before the start of the housing boom, it was the government, in the form of Congress, that repealed the Glass-Steagall Act, thus allowing certain banks that had previously viewed mortgages as a source of interest income to become instead deeply involved in securitizing pools of mortgages in order to obtain the much greater profits available from trading. It was the government, in the form of both the executive and the legislature, that encouraged deregulation, thus weakening the power and oversight not only of the SEC but also of such diverse banking overseers as the Office of Thrift Supervision and the Office of the Comptroller of the Currency, both in the Treasury Department. It was the government, in the form of the Federal Reserve, that kept interest rates low, in part to encourage mortgages. It was the government, in the form of the executive, that strongly encouraged banks to make loans to individuals with low incomes who might have previously been regarded as too risky to warrant a mortgage.

Thus, in the year 2000, HUD Secretary Andrew Cuomo increased to 50 percent the percentage of low-income mortgages that the government-sponsored entities known as Fannie Mae and Freddie Mac were required to purchase, helping to create the conditions that resulted in over half of all mortgages being subprime at the time the housing market began to collapse in 2007.

It was the government, pretty much across the board, that acquiesced in the ever-greater tendency not to require meaningful documentation as a condition of obtaining a mortgage, often preempting in this regard state regulations designed to assure greater mortgage quality and a borrower’s ability to repay. Indeed, in the year 2000, the Office of Thrift Supervision, having just finished a successful campaign to preempt state regulation of thrift underwriting, terminated its own underwriting regulations entirely.

The result of all this was the mortgages that later became known as “liars’ loans.” They were increasingly risky; but what did the banks care, since they were making their money from the securitizations. And what did the government care, since it was helping to create a boom in the economy and helping voters to realize their dream of owning a home?

Moreover, the government was also deeply enmeshed in the aftermath of the financial crisis. It was the government that proposed the shotgun marriages of, among others, Bank of America with Merrill Lynch, and of J.P. Morgan with Bear Stearns. If, in the process, mistakes were made and liabilities not disclosed, was it not partly the government’s fault? One does not necessarily have to adopt the view of Neil Barofsky, former special inspector general in charge of oversight of TARP, that regulators made almost no effort to hold accountable the financial institutions they were bailing out, to wonder whether the government, having helped create the conditions that led to the seeming widespread fraud in the mortgage-backed securities market, was all too ready to forgive its alleged perpetrators.

Please do not misunderstand me. I am not suggesting that the government knowingly participated in any of the fraudulent practices alleged by the Financial Inquiry Crisis Commission and others. But what I am suggesting is that the government was deeply involved, from beginning to end, in helping create the conditions that could lead to such fraud, and that this would give a prudent prosecutor pause in deciding whether to indict a CEO who might, with some justice, claim that he was only doing what he fairly believed the government wanted him to do.

That is one of the most stupidest defense of anything I have read in a long time. Using that reason, anytime someone commits a crime by firing a gun, the gov't created and encouraged the use of the gun because of the 2nd amendment.

 

[Frikki]

Are you dyslexic? I seem to remember you were a banker.

Yep, I'm a banker. I suppose you want me to be investigated?

Don´t be so touchy I have no desire to investigate tellers and mailroom employes. I would like the decision makers investigated.

In my country where the looked into if there were laws broke in the collapse they found case in every single bank, in the bureaucracy, by politicians and investors. This was done not as a witch hunt but as good old fashioned police work.

Why are you so worried about a real investigation and punishment of guilty parties taking place?

But you did not answer my question if you are dyslexic, you seem to be unable to understand the words that I write.

 

[whichphilosophy]

3 to 5 years in prison sounds a good deal for Icelands banker robbers. In the UK per R v Daly [1981] 3 Cr.App.R.(S.) 340
Bank robberies starting point 15 years. The moral is don't rob a bank, use a bank to rob.

 

[Harry Bosch]

Yep, I'm a banker. I suppose you want me to be investigated?

Don´t be so touchy I have no desire to investigate tellers and mailroom employes. I would like the decision makers investigated.

In my country where the looked into if there were laws broke in the collapse they found case in every single bank, in the bureaucracy, by politicians and investors. This was done not as a witch hunt but as good old fashioned police work.

Why are you so worried about a real investigation and punishment of guilty parties taking place?

But you did not answer my question if you are dyslexic, you seem to be unable to understand the words that I write.

I'll ignore your personal insults and answer the original question. In my opinion, the reasons why there have been no criminal convictions to date of the banking "decision makers":

1. Politicians are scared to push the issue much as it would shatter confidence in the economy and hurt wall street.
2. Proving "intent of fraud" is very difficult. It's far easier to pursue civil penalties.
3. Government and regulators were complicit in the fraud. So it's easier for them to make private civil deals rather than bring criminal prosecutions (that would expose them also).
4. I'm sure that there have been numerous criminal investigations. But most prosecutors prefer to go after cases that are easier to convict.

 

[Axulus]

Where is the evidence that there hasn't been enough investigation? This presumes some sort of knowledge about how many man hours of investigation there has been. So, a few questions:

1. How many man hours have been spent investigating for crimes?

2. How many man hours should there have been to have met an acceptable standard? Why do you think this amount is an acceptable standard?

 

[whichphilosophy]

Don´t be so touchy I have no desire to investigate tellers and mailroom employes. I would like the decision makers investigated.

In my country where the looked into if there were laws broke in the collapse they found case in every single bank, in the bureaucracy, by politicians and investors. This was done not as a witch hunt but as good old fashioned police work.

Why are you so worried about a real investigation and punishment of guilty parties taking place?

But you did not answer my question if you are dyslexic, you seem to be unable to understand the words that I write.

I'll ignore your personal insults and answer the original question. In my opinion, the reasons why there have been no criminal convictions to date of the banking "decision makers":

1. Politicians are scared to push the issue much as it would shatter confidence in the economy and hurt wall street.
2. Proving "intent of fraud" is very difficult. It's far easier to pursue civil penalties.
3. Government and regulators were complicit in the fraud. So it's easier for them to make private civil deals rather than bring criminal prosecutions (that would expose them also).
4. I'm sure that there have been numerous criminal investigations. But most prosecutors prefer to go after cases that are easier to convict.

I am not sure I would know enough regarding points 1, 2 and 3 but a prosecutor normally has to build a case which he/she believes can provide enough evidence for a prosecution.

 

[Harry Bosch]

I'll ignore your personal insults and answer the original question. In my opinion, the reasons why there have been no criminal convictions to date of the banking "decision makers":

1. Politicians are scared to push the issue much as it would shatter confidence in the economy and hurt wall street.
2. Proving "intent of fraud" is very difficult. It's far easier to pursue civil penalties.
3. Government and regulators were complicit in the fraud. So it's easier for them to make private civil deals rather than bring criminal prosecutions (that would expose them also).
4. I'm sure that there have been numerous criminal investigations. But most prosecutors prefer to go after cases that are easier to convict.

I am not sure I would know enough regarding points 1, 2 and 3 but a prosecutor normally has to build a case which he/she believes can provide enough evidence for a prosecution.

Well, to Axulus's point, how do you know that a prosecutor (or many prosecutors) haven't been building a case?

 

[whichphilosophy]

I am not sure I would know enough regarding points 1, 2 and 3 but a prosecutor normally has to build a case which he/she believes can provide enough evidence for a prosecution.

Well, to Axulus's point, how do you know that a prosecutor (or many prosecutors) haven't been building a case?

We simply don't until we are informed or find out.

 

[Loren Pechtel]

Also, the government in the states clearly has something on the banks since. "Regulators and prosecutors announced settlements with six international banks for alleged manipulation of currency markets (see article). The six agreed to pay some $5 billion in fines. Two did not admit to any crimes related to this abuse; the other four did, but received waivers shielding them from the consequence that would normally follow—the loss of an all-important banking licence. This week also marked the end of a 90-day period the Department of Justice (DoJ) had given itself to decide once and for all whether it could launch any prosecutions related to the financial crisis. The DoJ says only that it is reviewing the results of the review."

Which has nothing to do with the mortgage mess.

 

[Loren Pechtel]

That's LIBOR, not that 2008 financial crisis. I thought all the indignation was about no convictions regarding that? I would hope you'd agree that no one, no one, should face the peril of criminal prosecution and loss of liberty where there is no evidence of a crime. But given the bold above, I suspect your motivation is something other than justice.

If you don´t investigate crimes you don´t find them. There is nothing wrong with looking to see if crimes were committed. The indignation comes from the total lack of punishment levied against the parties responsible.
I added the white guys thing that you highlighted because you guys tend to be all about law and order when it comes to brown people.

America has this interesting concept of requiring the police to have probable cause before they get to go fishing in your stuff.

As Trausti says, writing the bad mortgages was in accordance with government policy and not a crime. We have no reason to think there are crimes involved. What's the justification for a search warrant??

 

[Harry Bosch]

If you don´t investigate crimes you don´t find them. There is nothing wrong with looking to see if crimes were committed. The indignation comes from the total lack of punishment levied against the parties responsible.
I added the white guys thing that you highlighted because you guys tend to be all about law and order when it comes to brown people.

America has this interesting concept of requiring the police to have probable cause before they get to go fishing in your stuff.

As Trausti says, writing the bad mortgages was in accordance with government policy and not a crime. We have no reason to think there are crimes involved. What's the justification for a search warrant??

Agreed. There is no US law against sub prime or ARM loans. A subprime loan is simply a loan to an individual who either has a lower than standard credit score or a higher than standard debt to income. But people with lower than standard credit and/or income still often repay their loans. The problem arose when the subprime loans were sold as "prime" or conforming loans. ARMs are a great vehicle for people who want lower rate, lower fees, and can afford the increase when it balloons. It should be a crime to portray an ARM as a fixed loan with no balloon. But it is very unlikely that the bank "decision makers" had a uniform stratedgy to sell ARMs and portray them as fixed loans.