Questions? Bill Black Has Questions About ‘Liar’ Loans and ‘Elite’ Bankers
http://blogs.wsj.com/deals/2011/09/01/questions-bill-black-has-questions-about-liar-loans-and-elite-bankers/"...What follows is what Black sees as three nagging questions from the banking crisis:
For the regulators and the non-prime mortgage lenders, packagers, CDO sellers, and rating agencies: When the FBI testified in September 2004 that there was an “epidemic” of mortgage fraud and predicted that it would cause a financial “crisis” what are the three most significant concrete actions your entity took in response to the warning? Oh, and please show us the contemporaneous documentation that you took those actions in response to the FBI warning.
Questions to the Fed and FRB Presidents: The revolt of the FRB presidents is justly famous.
When first Greenspan and then Bernanke refused to use the Fed’s unique statutory authority under HOEPA (Home Ownership Equity Protection Act) to stop “liar’s” loans from being made by non-federally insured lenders, why didn’t the FRB presidents revolt? How hard was it to figure out that one should stop loans that the industry called “liar’s” loans from being made?For 15 years after the S&L debacle was resolved by requiring lenders to recognize their losses, “prompt corrective action” against banks, vigorous prosecution of the elite S&L frauds, and the prompt sale of bad assets by the RTC — actions that allowed the markets to “clear” and produced a prompt recovery — the U.S. Treasury secretaries visited Tokyo and told Japan that our approach to resolving the S&Ls should be the model for Japan.
Instead, Japan persisted in a strategy premised on covering up bank losses and insolvent banks. The results were the lost decades. Why did the Bush and Obama turn their backs on the successful U.S. model and embrace the Japanese cover-up strategy?
If elite bankers can commit fraud with impunity, won’t the next banking crisis and depression be even more severe?"
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
