The Financial Warning Almost Everyone Ignored

[marmar]

from OurFuture.org:



The Financial Warning Almost Everyone Ignored
By Isaiah J. Poole

April 28th, 2009 - 11:00am ET


The warning, in retrospect, could not have been any clearer. It led to this unambiguous headline on CNN.com on September 17, 2004: "FBI warns of mortgage fraud 'epidemic'."

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.

Little did we know that the "unscrupulous professionals" would prove to be such people as IndyMac president Richard H. Wohl and Countrywide CEO Angelo Mozilo, but, as University of Missouri associate professor William K. Black points out in this interview, top government and industry officials had ample time and ample information to prevent today's financial crisis, but chose to do nothing.

Uncovering the factors that led to that fateful choice is the reason why Black, who was a senior regulator during the savings and loan crisis in the 1980s, supports the creation of a Pecora Commission, modeled after the 1930s investigative panel headed by Ferdinand Pecora that exposed the corrupt practices that helped fuel the Great Depression.

Black said that such a commission should look at the compensation incentives that encouraged mortgage fraud as well as the "complete regulatory failure" that took place during the Bush administration. (That includes the failure of the Bush administration and the then Republican-led Congress to beef up law enforcement resources at the FBI so that it could more aggressively go after the mortgage fraud it knew was there.) The commission's work would clarify that the mortgage crisis was driven by systemic problems within the financial industry and the rating agencies that were supposed to be honest evaluators of the debt being sold by these institutions. It was not, as conservatives would have us believe, primarily driven by individual home buyers trying to game the system or regulators pressuring banks to market unsound loans to people of color. .........(more)

The complete piece is at: http://www.ourfuture.org/blog-entry/2009041828/financial-warning-almost-everyone-ignored

[ixion]

1. that "criminal groups" caused the meltdown is complete and utter bs

the criminals were the financial institutions and the fraudulent debt vehicles. Was there fraud by the mob? Of course. Was that the cause of the meltdown? Not even close.

[digidigido]

5. Did you read this post and watch the video? He says NOTHING ABOUT THE MOB?

[bemildred]

2. Well, it's the government that ignored it.

There have been lots of people pointing out that the mortgage bubble was a bubble. Just like lots of people said that repealing Glass-Steagal was as stupid idea.

[Hissyspit]

3. People here at DU were on top of it. Lots of discussion.

[indepat]

4. 'pukes purportedly keeping us safe from terra, but little else

:P

[digidigido]

6. He's right, a commission should be appointed, but I'd make it a special prosecutor

[DCKit]

7. R.I.C.O. n/t