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Cheat Sheet: What’s Happened to the Big Players in the Financial Crisis

With the financial crisis back in the center of the national conversation, here’s a quick refresher on the roles of some of the main players, as well as what consequences they’ve faced.

Mounted police stop Occupy Wall Street participants trying to break through police barricade in Times Square, Oct. 15, 2011. (EMMANUEL DUNAND/AFP/Getty Images)

Widespread demonstrations in support of Occupy Wall Street have put the financial crisis back into the national spotlight lately.

So here’s a quick refresher on what’s happened to some of the main players, whose behavior, whether merely reckless or downright deliberate, helped cause or worsen the meltdown. This list isn’t exhaustive -- feel welcome to add to it.

Mortgage originators

Mortgage lenders contributed to the financial crisis by issuing or underwriting loans to people who would have a difficult time paying them back, inflating a housing bubble that was bound to pop. Lax regulation allowed banks to stretch their mortgage lending standards and use aggressive tactics to rope borrowers into complex mortgages that were more expensive than they first appeared. Evidence has also surfaced that lenders were filing fraudulent documents to push some of these mortgages through, and, in some cases, had been doing so as early as the 1990s. A 2005 Los Angeles Times investigation of Ameriquest – then the nation’s largest subprime lender – found that “they forged documents, hyped customers' creditworthiness and ‘juiced’ mortgages with hidden rates and fees.” This behavior was reportedly typical for the subprime mortgage industry. A similar culture existed at Washington Mutual, which went under in 2008 in the biggest bank collapse in U.S. history.

Countrywide, once the nation’s largest mortgage lender, also pushed customers to sign on for complex and costly mortgages that boosted the company’s profits. Countrywide CEO Angelo Mozilo was accused of misleading investors about the company’s mortgage lending practices, a charge he denies.  Merrill Lynch and Deutsche Bank both purchased subprime mortgage lending outfits in 2006 to get in on the lucrative business. Deutsche Bank has also been accused of failing to adequately check on borrowers’ financial status before issuing loans backed by government insurance. A lawsuit filed by U.S. Attorney Preet Bharara claimed that, when employees at Deutsche Bank’s mortgage received audits on the quality of their mortgages from an outside firm, they stuffed them in a closet without reading them. A Deutsche Bank spokeswoman said the claims being made against the company are “unreasonable and unfair,” and that most of the problems occurred before the mortgage unit was bought by Deutsche Bank.

Where they are now: Few prosecutions have been brought against subprime mortgage lenders. Ameriquest went out of business in 2007, and Citigroup bought its mortgage lending unit. Washington Mutual was bought by JP Morgan in 2008. A Department of Justice investigation into alleged fraud at WaMu closed with no charges this summer. WaMu also recently settled a class action lawsuit brought by shareholders for $208.5 million. In an ongoing lawsuit, the FDIC is accusing former Washington Mutual executives Kerry Killinger, Stephen Rotella and David Schneider of going on a "lending spree, knowing that the real-estate market was in a 'bubble.'" They deny the allegations.

Bank of America purchased Countrywide in January of 2008, as delinquencies on the company’s mortgages soared and investors began pulling out. Mozilo left the company after the sale. Mozilo settled an SEC lawsuit for $67.5 million with no admission of wrongdoing, though he is now banned from serving as a top executive at a public company. A criminal investigation into his activities fizzled out earlier this year. Bank of America invited several senior Countrywide executives to stay on and run its mortgage unit. Bank of America Home Loans does not make subprime mortgage loans. Deutsche Bank is still under investigation by the Justice Department.

Mortgage securitizers

In the years before the crash, banks took subprime mortgages, bundled them together with prime mortgages and turned them into collateral for bonds or securities, helping to seed the bad mortgages throughout the financial system. Washington Mutual, Bank of America, Morgan Stanley and others were securitizing mortgages as well as originating them. Other companies, such as Bear Stearns, Lehman Brothers, and Goldman Sachs, bought mortgages straight from subprime lenders, bundled them into securities and sold them to investors including pension funds and insurance companies.

Where they are now: This spring, New York’s Attorney General launched a probe into mortgage securitization at Bank of America, JP Morgan, UBS, Deutsche Bank, Goldman Sachs and Morgan Stanley during the housing boom. Morgan Stanley settled with Nevada’s Attorney General last month following an investigation into problems with the securitization process.

As part of a proposed settlement with the 50 state attorneys general over foreclosure abuses, several big banks were offered immunity from charges related to improper mortgage origination and securitization. California and New York have withdrawn from those talks.

The people who created and dealt CDOs

Once mortgages had been bundled into mortgage-backed securities, other bankers took groups of them and bundled them together into new financial products called Collateralized Debt Obligations. CDOs are composed of tiers with different levels of risk. As we’ve reported, a hedge fund named Magnetar worked with banks to fill CDOs with the riskiest possible materials, then used credit default swaps to bet that they would fail. Magnetar says that the majority of its short positions were against CDOs it didn’t own. Magnetar also says it didn’t choose what went its own CDOs, though people involved in the deals who spoke to ProPublica contradict this account.

American International Group’s London-based financial products unit was among the entities that provided credit default swaps on CDOs. Though the business of insuring the risky securities made AIG large short-term profits, it eventually brought the company to the brink of collapse, prompting an $85 billion government bailout.

Merrill Lynch, Citigroup, UBS, Deutsche Bank, Lehman Brothers and JPMorgan all made CDO deals with Magnetar. The hedge fund invested in 30 CDOs from the spring of 2006 to the summer of 2007. The bankers who worked on these deals almost always reaped hefty bonuses. From our story:

Even today, bankers and managers speak with awe at the elegance of the Magnetar Trade. Others have become famous for betting big against the housing market. But they had taken enormous risks. Meanwhile, Magnetar had created a largely self-funding bet against the market.

When banks found CDOs hard to sell, some of them, notably Merrill Lynch and Citibank, bought each other’s CDOs, creating the illusion of true investors when there were almost none. That was one way they kept the market for CDOs going longer than it otherwise would have. Eventually CDOs began purchasing risky parts of other CDOs created by the same bank. Take a look at our comic strip explaining self-dealing, and our chart detailing which banks bought their own CDOs.

Goldman Sachs and Morgan Stanley also made similar deals in which they created, then bet against, risky CDOs. The hedge fund Paulson & Co helped decide which assets to put inside Goldman’s CDOs.

Where they are now: Overall, the banks and individuals involved in CDO deals haven’t been convicted on criminal charges. The civil suits against them have produced fines that aren’t very big compared to the profits they made in the leadup to the financial crisis. JP Morgan paid $153.6 million to settle an SEC suit alleging they hadn’t disclosed to investors that Magnetar was betting against Morgan’s CDO. Citigroup just agreed to pay a $285 million fine to the SEC for betting against one of its mortgage-related CDOs. The lawsuit doesn’t mention dozens of similar deals made by Citi.

Magnetar is still thriving (the deals they made weren’t illegal according to the rules at the time). In 2007, Magnetar’s founder took home $280 million, and the fund had $7.6 billion under management. The SEC is considering banning hedge funds and banks from betting against securities of their own creation. As of May 2010, federal prosecutors were investigating Morgan Stanley over their CDO deals, and Goldman Sachs paid $550 million last year to settle a lawsuit related to one of theirs. Only one Goldman employee, Fabrice Tourre, has been charged criminally in connection to the deals.

Though recorded phone calls suggest that former AIG CEO Joseph Cassano misled investors about the credit default swaps that contributed to his company’s troubles, the evidence wasn’t airtight, and federal probes against him fell apart in 2010. Cassano’s lawyers deny any wrongdoing.

The ratings agencies

Standard and Poor’s, Moody’s and Fitch gave their highest rating to investments based on risky mortgages in the years leading up to the financial crisis. A Senate investigations panel found that S&P and Moody’s continued doing so even as the housing market was collapsing. An SEC report also found failures at 10 credit rating agencies.

Where they are now: The SEC is considering suing Standard and Poor’s over one particular CDO deal linked to the hedge fund Magnetar. The agency had previously considered suing Moody’s, but instead issued a report criticizing all of the rating agencies generally. Dodd-Frank created a regulatory body to oversee the credit rating agencies, but its development has been stalled by budgetary constraints.

The regulators

The Financial Crisis Inquiry Commission [PDF] concluded that the Securities and Exchange Commission failed to crack down on risky lending practices at banks and make them keep more substantial capital reserves as a buffer against losses. They also found that the Federal Reserve failed to stop the housing bubble by setting prudent mortgage lending standards, though it was the one regulator that had the power to do so.

An internal SEC audit faulted the agency for missing warning signs about the poor financial health of some of the banks it monitored, particularly Bear Stearns. [PDF] Overall, SEC enforcement actions went down under the leadership of Christopher Cox, and a 2009 GAO report found that he increased barriers to launching probes and levying fines.

Cox wasn’t the only regulator who resisted using his power to rein in the financial industry. The former head of the Federal Reserve, Alan Greenspan, reportedly refused to heighten scrutiny of the subprime mortgage market. Greenspan later said before Congress that it was a mistake to presume that financial firms’ own rational self-interest would serve as an adequate regulator. He has also said he doubts the financial crisis could have been prevented.

The Office of Thrift Supervision, which was tasked with overseeing savings and loan banks, also helped to scale back their own regulatory powers in the years before the financial crisis. In 2003 James Gilleran and John Reich, then heads of the OTS and Federal Deposit Insurance Corporation respectively, brought a chainsaw to a press conference as an indication of how they planned to cut back on regulation. The OTS was known for being so friendly with the banks -- which it referred to as its “clients” -- that Countrywide reorganized its operations so it could be regulated by OTS. As we’ve reported, the regulator failed to recognize serious signs of trouble at AIG, and didn’t disclose key information about IndyMac’s finances in the years before the crisis. The Office of the Comptroller of the Currency, which oversaw the biggest commercial banks, also went easy on the banks.

Where they are now: Christopher Cox stepped down in 2009 under public pressure. The OTS was dissolved this summer and its duties assumed by the OCC. As we’ve noted, the head of the OCC has been advocating to weaken rules set out by the Dodd Frank financial reform law. The Dodd Frank law gives the SEC new regulatory powers, including the ability to bring lawsuits in administrative courts, where the rules are more favorable to them.

The politicians

Two bills supported by Phil Gramm and signed into law by Bill Clinton created many of the conditions for the financial crisis to take place. The Gramm-Leach-Bliley Act of 1999 repealed all the remaining parts of Glass-Steagall, allowing firms to participate in traditional banking, investment banking, and insurance at the same time. The Commodity Futures Modernization Act, passed the year after, deregulated over-the-counter derivatives – securities like CDOs and credit default swaps, that derive their value from underlying assets and are traded directly between two parties rather than through a stock exchange. Greenspan and Robert Rubin, Treasury Secretary from 1995 to 1999, had both opposed regulating derivatives.  Lawrence Summers, who went on to succeed Rubin as Treasury Secretary, also testified before the Senate that derivatives shouldn’t be regulated.

It’s worth noting the substantial lobbying efforts that accompanied the deregulation process. According to the FCIC [PDF], between 1999 and 2008 the financial industry spent $2.7 billion lobbying the federal government, and donated more than $1 billion to political campaigns. While deregulation took place mainly under Clinton’s watch, George W. Bush is faulted for not doing more to catch the out-of-control housing market.

As president of the New York Fed from 2003 to 2009, Timothy Geithner also missed opportunities to prevent major financial firms from self-destructing. As we reported in 2009:

Although Geithner repeatedly raised concerns about the failure of banks to understand their risks, including those taken through derivatives, he and the Federal Reserve system did not act with enough force to blunt the troubles that ensued. That was largely because he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound.

Henry Paulson, Treasury Secretary from 2006 to 2009, has been criticized for being slow to respond to the crisis, and introducing greater uncertainty into the financial markets by letting Lehman Brothers fail. In a 2008 New York Times interview, Paulson said he had no choice.

Where they are now: Gramm has been a vice chairman at UBS since he left Congress in 2002. Greenspan is retired. Summers served as a top economic advisor to Barack Obama until November 2010; since then, he’s been teaching at Harvard. Geithner is currently serving as Treasury Secretary under the Obama administration.

Executives of big investment banks

Executives at the big banks also took actions that contributed to the destruction of their own firms. According to the Financial Crisis Inquiry Commission report [PDF], the executives of the country’s five major investment banks -- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley kept such small cushions of capital at the banks that they were extremely vulnerable to losses. A report compiled by an outside examiner for Lehman Brothers found that the company was hiding its bad investments off the books, and Lehman’s former CEO Richard S. Fuld Jr. signed off on the false balance sheets. Fuld had testified before Congress two years before that the actions he took prior to Lehman Brothers’ collapse “were both prudent and appropriate” based on what he knew at the time. Other banks also kept billions in potential liabilities off their balance sheets, including Citigroup, headed by Vikram Pandit.

In 2010, we detailed how a group of Merrill Lynch executives helped blow up their own company by retaining supposedly safe – but actually extremely risky –  portions of the CDOs they created, paying a unit within the firm to buy them when almost no one else would.

The New York Times’ Gretchen Morgenson described how the administrative decisions of some top Merrill executives helped put the company in a precarious position, based on interviews with former employees.

Where they are now: In 2009, two Bear Stearns hedge fund managers were cleared of fraud charges over allegedly lying to investors. A probe of Lehman Brothers stalled this spring. Merrill Lynch was sold to Bank of America in the fall of 2008. As for the executives who helped crash the firm, as we reported in 2010, “they walked away with millions. Some still hold senior positions at prominent financial firms.” Dick Fuld is still working on Wall Street, at an investment banking firm. Vikram Pandit remains the CEO of Citigroup.

Fannie Mae and Freddie Mac

The government-sponsored mortgage financing companies Fannie Mae and Freddie Mac bought risky mortgages and guaranteed them. In 2007, 28 percent of Fannie Mae’s loans were bought from Countrywide. The FCIC found [PDF] that Fannie and Freddie entered the subprime game too late and on too limited a scale to have caused the financial crisis. Non-agency-securitized loans had an increased share of the market in the years immediately preceding the crisis.

Many believe that The Community Reinvestment Act, a government policy promoting homeownership for low-income people, was responsible for the growth of the subprime mortgage industry. This idea has largely been discredited, since most subprime loans were made by companies that weren’t subject to the act

Still, Fannie and Freddie engaged in reckless behavior and sustained heavy losses as a result. The SEC slammed Fannie Mae for improper accounting under the leadership of Frank Raines in the years preceding the financial crisis. A report by the Office of Federal Housing Enterprise Oversight found that Fannie and Freddie didn’t accurately disclose the risks they were taking and “deliberately and intentionally manipulat[ed] accounting to hit earnings targets.” [PDF]

Richard Syron and Daniel Mudd were at the helm of Freddie and Fannie, respectively, when they began to buy large numbers of subprime loans. Current and former Freddie Mac employees have accused Syron of ignoring warnings about the health of the loans the company was buying. Syron and Mudd maintain they could not have foreseen the rapid decline in the housing market.

Where they are now: As borrowers defaulted on mortgages they’d insured, Fannie and Freddie received a nearly $200 billion federal government bailout, and the government took over their operations. They are close to a settlement in an SEC lawsuit, and will neither admit nor deny that they failed to inform investors about risks of exposure to subprime mortgages. The Dodd Frank financial reform law stated that serious reforms of Fannie and Freddie are needed, but didn’t address how they should be carried out. A report from Treasury Secretary Geithner called for the government to “ultimately wind down” the two mortgage giants. [PDF] In the meantime, taxpayers have been shouldering their legal fees. Former Freddie and Fannie executives Richard Syron and Daniel Mudd received Wells notices this spring, a sign that the SEC is considering legal action against them.

“Two bills supported by Phil Gramm and signed into law by Bill Clinton created many of the conditions for the financial crisis to take place. The Gramm-Leach-Bliley Act of 1999 repealed all the remaining parts of Glass-Steagall, allowing firms to participate in traditional banking, investment banking, and insurance at the same time. The Commodity Futures Modernization Act, passed the year after, deregulated over-the-counter [61] derivatives [62] – securities like CDOs and credit default swaps, that derive their value from underlying assets and are traded directly between two parties rather than through a stock exchange. Greenspan and Robert Rubin, Treasury Secretary from 1995 to 1999, had both opposed regulating derivatives [63].  Lawrence Summers, who went on to succeed Rubin as Treasury Secretary, also testified before the Senate [64] that derivatives shouldn’t be regulated.”

Gramm, Clinton, Greenspan, Rubin, Summers and other like-minded nitwits in both political shake down gangs opened every door for the Wall Street crooks to ruin the economy - and they’re doing it again.  And Lloyd Blankfein of Goldman Sachs and their army of vampires all belong in orange jump suits in Club Fed along with hundreds of others from every large investment house.

kent mollohan

Oct. 26, 2011, 3:13 p.m.

It’s true that under President Clinton, the “market” as pretty much defined by Wall Street and several of it’s then current, former and now after members like Rubin, devised more ways to make money for the brokerage and bank firms including the lax regulations of same.  But don’t forget the savings and loan scandals under the uber-President Reagan, which were where most of the impetus came from.  Ah, it is the economy, stupid (aren’t we all).  The money trumps sense most of the time, eh?

IN 07’ I WAS FIRED FROM MY JOB, THE BANK COUNTRY WIDE CONVINCED ME TO REFINANCE TO HELP PAY MY MORGAGE. LIL DID I KNOW HOW MUCH MY PAYMENTS WENT UP. WHEN I TRIED CALLING COUNTRY WIDE NO ONE WANTED TO HELP, THEY KNEW I COULDNT AFFORD IT. I END UP LOSING MY HOME, ALL MY AND KIDS BELONGINGS. ITS REALLY SAD THAT PEOPLE/BANKS CAN GET AWAY WITH DOING THAT TO PEOPLE

What I don’t understand is, with millions of fraudulent transactions exposed, why aren’t the mortgage brokers, loan officers, bank officials, etc. in jail? Pass a bad check: jail. Steal a credit card: jail. Use the mails for fraud: jail. Why are these crooks still drawing salaries and sleeping in their own warm beds?

The original “moral hazard” responsible for the failure to hold the rich and powerful accountable for anything since, was Gerald Ford’s pardon of Richard Nixon.

In this country the punishment is directly inverse to the magnitude of the crime. They all get away with it because it is too hard to prosecute. But God forbid I forget to move my car on street cleaning days and it costs me 100% of my day’s pay. That is so wrong I have no words to convey it.

Al, your points and questions are the very motivation behind the OWS and similar efforts all over the country -and world. We The People have been asleep at the wheel in terms of letting corporatists grasp the steering wheel.
Just as good oral hygiene leads to healthy teeth and smile, good Political Hygiene leads to a people being in charge of their fate.

Barry Schmittou

Oct. 26, 2011, 5:11 p.m.

Obama and Bush’s SEC, DOJ and DOL are equally involved in protecting corporate organized crime. Please get this evidence before a Grand Jury !!!!

Wachovia Bank Laundered $378 Billion Dollars for Murderous Mexican Drug Cartels !! No One at Wachovia Was Prosecuted !! Wachovia Paid $110 Million in Fines Which is only 1/3 of one percent of the $378 Billion of Murder Related Money They Laundered !! (More financial and drug murder evidence linked below)

ProPublica wrote this about the DOL’s failure to enforce the laws for DBA War Zone insurance :

Labor officials can recommend cases for prosecution to the Justice Department–but have only done so once in the past two decades, according to Labor officials.”

“CNA withheld portions of the investigators’ findings when it submitted the claims to the Labor Department, court records show.”

Here’s proof insurance companies are removing medical records in two more types of insurance :

The following quotes were written by the Honorable Judges from the 6th Circuit in the case of Wanda Glenn verses Metlife :

“This inappropriately selective consideration of Glenn’s medical record was compounded by the fact that the occupational skills analyst and the independent medical consultant were apparently not provided with full information from Dr. Patel on which to base their conclusions.”

WFAA-TV won a Peabody Award for a story that included this quote about Workers Comp claims :

“a remarkable number of Texans committed suicide because they could no longer endure the pain caused by their injuries and they had been repeatedly turned down for worker’s comp care. Some insurance companies send peer review doctors medical files “stripped” of records important to the possible approval of workers’ comp claims.”

So ... you have records removed from injured War Zone Contractors claims, disability claims, and workers comp claims !!

The DOL website writes that DOL Secretary Solis “is responsible” for protecting the disability claimants and the injured contractors !!

DOL and DOJ have done nothing after reviewing volumes of evidence I’ve submitted.

The evidence includes quotes from numerous Federal Court Judges that prove insurance company Doctors’ ignore life threatening medical conditions including Brain lesions and Multiple Sclerosis, cardiac conditions of many patients, and a foot that a new mother broke in 5 places.

Multiple Judges prove MetLife is also very fond of endangering Psychological claimants lives !!

Obama’s DOL and DOJ Directors have seen this evidence but will do nothing to stop these crimes even though the patients may die before their case is heard by the Courts !!!!

The quotes can be seen by pasting the following website : deadlyorganizedcrimes.blogspot.com

You can see how Obama and Bush protected these crimes in five different types of insurance by pasting :

treasonevidence.blogspot.com

The U.S. Government is also protecting huge money laundering crimes !!

As mentioned Wachovia Bank laundered $378 billion for Mexican drug cartels who are responsible for 35,000 murders. No one was prosecuted by Obama !!

Three weeks ago these murderers disemboweled and hung a woman from a bridge and dumped 35 bodies on a busy road in front of a mall while horrified drivers sped by !!

Please paste obamadrugmurdersconnection.blogspot.com to see more evidence I filed in Court.

You’ll also see how multiple corporations including AIG committed crimes repeatedly but no one ever gets prosecuted !!!!!

I keep posting this evidence because I hope and pray an average citizen sitting on a local or Federal Grand jury will seek indictments of the corporate criminals and the government officials who protect them !! I pray God will help us stop the U.S. Government leaders protection of deadly organized crimes !!

William Black audio interview discussing Bank of America (BAC) $75 trillion notional value of Credit Default Swaps (CDS) transferred from its Merrill Lynch unit to its retail banking arm.

http://youtu.be/C3xwT_6R1yQ

Joseph Zernik, Human Rights Alert (NGO)

Oct. 26, 2011, 6:44 p.m.

The report may mislead the naive reader to believe that things have changed at SEC, OTS, Trade Commission, OCC, FRB, US Congress, etc.

Regardless of OWS and everything else, it is business as usual.

LINKS:

[1] 11-08-08 PRESS RELEASE: Fraud and Corruption in the US Courts are Tightly Linked to Failing Banking Regulation and the Global Economic Crisis – presentation in the 16th World Criminology Congress, Japan
http://www.scribd.com/doc/62153608/
[2] 10-05-05 Countrywide, Bank of America [NYSE;BAC], and its President Brian Moynihan Compilation of Records Evidence of Racketeering
http://www.scribd.com/doc/30975368/
[3] 10-05-05 Chairs of US Congress Committees of the Judiciary and Banking Are Requested to Join Senator Feinstein’s Inquiries on Comptroller of the Currency
http://www.scribd.com/doc/30979882/
[4] 10-07-06 Complaint Filed with US Attorney Office Los Angeles Against Moynihan Bank of America [NYSE:BAC] Bryan Cave LLP Alleging Racketeering
http://www.scribd.com/doc/33971099/

Naturally this story concentrates on the players at the top who violated both our sensibilities and the law. However, I haven’t seen much written about the thousands of licensed real estate agents who raked in sales for their agencies. And what about the mortgage brokers who “forgot” to question exaggerated incomes they then used as a basis to make these home loans.

This excellent reporting can never dig deep enough because the lingering problem that emerges is pervasive dishonesty. Even trusted, licensed professionals did nothing to call out corrupt practices which turned into the banking nightmare few people at that level could have envisioned.

Yo Max, the Bankruptcy Reform Act of 2006 made derivatives the primary claim in default, specifically naming CDS’s.

Fiona Mackenzie

Oct. 26, 2011, 10:57 p.m.

Animal cruelty!  Horses just hate stepping on ishy things and people, and having posters waved in their faces.  If the cops think that’s a good thing to do, why don’t they dismount and do it themselves?

Frank, it was actually the Commodities Futures Modernization Act of 2000 (CFMA), although the path for OTC derivitives trading was cleared by other de-regulatory actions in the 1980s and 1990s. The Milton Friedman model brought us to where we are.  The 2000 act was sold to Clinton (who was such a dufus regarding finance when he came to office Rubin had to explain to him that the bond market dwarfed the stock market and would be the basis for the success of failure of his own paltry economic stimulus) - by the usual suspects - Greenspan, Rubin, Summers and Gramm (another dummy).  The fact that Bush piled on and made things much worse surprised no one inside the federal bureaucracy,where I resided in 2000.  Gore, a DLC DINO, actually laid some of the groundwork to allow deep penetration into the lower levels of federal agencies by K Street lobbyists with his naive Total Quality Environment program.  The message was: work closely with the corporate sector - these are the “good guys” - listen to their great egalitarian ideas. The only cultural change inside the government from Clinton/Gore to Bush was what I call stealth corruption to open corruption.  The voters finally caught on (some of them anyway), when the economy crashed.  Obama was supposed to right the ship but he couldn’t because of opposition, or wouldn’t, because of his own ideology.  And here we are.  The people now taking to the streets get all of this and they feel they have no other option, and they probably don’t.  The root problem is the failed capitalist model we use instead of the many other capitalist options used around the world.  I recommend Ha-Joon Chang’s book, “23 Things They Don’t Tell You About Capitalism,” to see the rest of the capitalism buffet, some of which would be better for our nation.  Godspeed to the protesters.  They are young disenfranchised people trying to take their country back for all of us, not a gang of dumb, gun toting nitwits bankrolled by the Koch Brothers.  This is the real thing.

It should not live in the capitals of the world and work make it.Do the capitals of the world to ghost towns.
People’s Assembly officials are potential ..!

Think about it why.

 

 

.

It should not live in the capitals of the world and Work.Do the capitals of the world to ghost towns.
People’s Assembly officials are potential ..!

Think about it why.


M.f.G

Habnix

HERES MY ANOLOGY-

IF THE FINE 4 STEALING A HUNDERD DOLLERS IS $50= THE THEIF STILL MADE FIFTY BUCKS= EVEN AFTER GETTING CAUGHT. AND NOBODY KNOSE WHAT HE STOLED BEFOR THAT!!

THEY OUGHTA BE UNDER THE JAIL!!

WAIT A SEC. The mortgage lenders gave away loans to people who shouldn’t be able to afford it and SAID PEOPLE TOOK THE LOANS ANYWAY.

And when they failed to pay their loans in bulk, we’re all screwed. Main Street isn’t a passive victim here.

I object to characterizing Magnetar’s deals as not illegal.  It’s true that there was no SEC rule against what they did, but you try taking out insurance on a house that you know is going to burn down within the year.  If you can “make the deal” at all, you’ll be arrested for fraud.

Unless we claim that bankers are not obligated to follow the law in this country (in which case, the SEC should create a rule against murder, just in case), they broke the law.

They also broke SEC rules regarding conflicts of interest, which exist specifically for the case where you’re trying to sell something you’re hoping fails!  That is, by definition, insider trading and attempt to defraud.

On top of that (or as an alternative to that), their failure to disclose both their interest and their appraisal would seem to breach every contract they made to sell the securities, invalidating them and opening them up for civil suits by the hundred.

Max, that’s a fair assessment, though I’d argue that, given Gore’s subsequent attempts to launch a Carbon Credit Exchange (designed by Ken Lay), his programs were far from naive.  (I might also say the same of Clinton—his being wrong seemed like a mission statement, rather than an assessment of fact.  Because look where we are today.)

John, thanks for the feedback.  Gore’s behavior since 2000 has been almost all environmental, where he makes his living now, and I agree a carbon tax, like national health care, are both inevitable here unless we want to become a bankrupt two-class society.  My beef with Gore during Clinton’s term was the enormous amount of time, money, and energy spent driving career feds crazy with a Dilbert-like TQE initiatives, which had already been abandoned by the private sector as useless.  We hated him.  Career people know the law and the purpose of the programs they are hired to administer and protect.  They didn’t need someone who was in bed with lobbyists telling them to gut their programs to make corporations happier.  The unintended consequence was Clinton/Gore set up the template that allows K Street crooks easy access to federal agencies for the purpose of influence peddling to this day.  That whole DLC gang took us off the rails and too many on the left are willing to give Clinton a pass for the damage done to the economy that came to fruition in 2008.  That 2000 law I cited in my post is the one that delivered trillions in mortgage money to the investment bank/casinos on Wall Street.  They were too big to fail and too big to prosecute.  It will take a real Depression to wake up the voters and finally take down the rich, in my opinion.

Lexie:  Get a life…..some people aren’t that saavy about loans.  They believe what the mortgage broker told them.  I know, for myself, I have an MBA, but I still got an adjustable loan (which I later refinanced into a 30-year fixed).  I didn’t understand all the junk the mortgage broker was telling me, and a lot of other reasonably smart people don’t either.  We depended on them to watch our backs….so, it wasn’t ENTIRELY the fault of the person getting the mortgage as they were lied to by the broker!  Unless you’re a psychic, there’s NO way you can tell that someone is lying to you, especially with something as complex as mortgages.  Also, people got loans for homes they could afford at the time…they had NO idea they might lose their jobs, have a medical emergency, or that the economy would tank, etc.  People keep trying to blame the owners for defaulting on their loans; but, again, most people had NO idea that these problems were going to happen.  The economy tanked, people lost jobs, etc. and no one could have foretold that…..at least not Joe Q Public.  I know most of the people I know who are having problems would LOVE to be able to pay their mortgages and are basically heartsick over the situation as they have ALWAYS paid on time in the past.  Bad things happen to good people sometimes, Lexie…..it could happen to you!

Yes, the big players in DC and on Wall Street are most responsible for the mess. But I also agree with reader comments about corruption on Main Street; rampant greed, a decay in ethics, and outright fraud was prevalent in high and low places. In the fraud category, include everyone who lied about income, assets, primary residences, etc. on mortgage documents. Of course, many of these “American Dreamers” now claim they were tricked.

Also, this article understates the importance of Fannie Mae and Freddie Mac.Their ground-breaking, lucrative adventures with securities based on poorly underwritten mortgage loans based on inflated appraisals, encouraged non-government entities to get into the act. Eventually, Fannie and Freddie had to play catch up with the subprime industry they inspired.

And we haven’t even mentioned the Oil Bubble of 2006-8 here, which quadrupled the international price of oil in less than two years and quite deliberately wrecked the world economy, although it’s been pushed firmly down the plutocratic memory hole, especially with regard to the MSM:

http://jdkabc.blogspot.com/2011/08/imtob.html

MicheleMoore-Happy1

Oct. 27, 2011, 12:51 p.m.

You overlook the real root causes of the housing crises - fraud and non-income verification mortgage loans.
 
Asst. FBI Director Chris Schwecker said fraud in the mortgage industry was EPIDEMIC in 2004, but he was denied funding to investigate and prosecute it.  He retired in 2006 and went to work for Bank of America. His activities get no coverage from the press.
 
When I was in the Management Training program of a major southern bank, we ALWAYS verified a loan applicant’s stated income in addition to reviewing their credit report - even for small $5,000 loans.

Extending hundreds of thousand of dollars in mortgage loans without income verification is an open invitation for fraud.  Assuming an ever rising housing market will cover the problem is even more absurd.
 
Anyone with any sense who knew the details of the mortgage industry’s operations would realize this economic bomb was deliberate and premeditated.

Mary, the mortgage crooks, starting with the applicants, through the brokers and loan officers who failed to check incomes, to the clowns who securitized them, all signed fraudulent documents. What is so hard about prosecuting them?

Barry Schmittou

Oct. 27, 2011, 2:38 p.m.

You or someone you know will be on a Federal or local Grand Jury soon. Please save this !!

Someday there must be prosecutions for the $378 billion dollars that Wachovia Bank laundered for the murderous Mexican drug cartels, and all the other corporate crimes that Obama and Bush have protected.

The Justice For All Act of 2004 is another option. Any citizen can file them in Federal Court.I will be filing some of those in the future regarding all the evidence seen at my links posted in comments on ProPublica.

Additionally, citizens can request an appearance before Grand Juries in some states including Tennessee. I appeared before the Davidson County Grand Jury in 2004.

( It takes repeated efforts !! )

Within one minute I knew the Grand Jury foreman would not seek justice. They refused to investigate.

One year later I added evidence from the Memphis Commercial Appeal, and with the help of a perfect media storm I filed an ethics complaint that caused State Wide headlines and TV coverage and led to the indictment and conviction of Ford.

Here’s a quote from WSMV TV in 2006 :

“Schmittou’s ethics complaint is what led the state to turn the case over to the attorney general’s office and ultimately to a federal grand jury ending in today’s indictment.”

It takes tremendous repeated efforts to get any sign of justice. You will get on the nerves of many. You can’t let that stop you when so many lives are being destroyed.

There are so many crimes being openly committed the evidence will quickly overwhelm the huge majority of people.

Many are not interested until the crimes endanger them, but they do not understand that every average citizen and every living being in the world are in great danger because of the heartless greed that possesses the leaders of the world.

Most people including Christians falsely believe there is nothing they can do to stop huge injustices. I think we are probably all trained to believe that.

The Bible confirms the need to stop injustices including Jeremiah 22:3 :

“Thus says the Lord: Do justice and righteousness, and deliver from the hand of the oppressor him who has been robbed. And do no wrong or violence to the resident alien, the fatherless, and the widow, nor shed innocent blood in this place.”

Some (who may be connected to the criminals) will discourage you and/or attack you, especially if you mention God.

They don’t understand that when you lose everything to corporate crimes you see that God is all we really have, and if we are blessed through him we also have the love of family and friends.

I repeatedly post evidence here because I pray individual citizens on Grand Juries will seek indictments since the Feds are protecting the crimes.

As mentioned you or someone you know will be on a Federal or local Grand Jury soon. If you want much more evidence please see contact me at the email address seen at the very end of treasonevidence.blogspot.com

I know more citizens who will also come forward with case evidence if a Grand Jury requests it.

A Grand Jury can also reach me by contacting the U.S. Attorney Jerry Martin in Nashville. He and Obama received certified copies of my Court filing that is seen at :

obamadrugmurdersconnection.blogspot.com

Obama’s DOL and DOJ Directors also have my contact information.

They read my communications and sometimes respond, but never take action, even though they are very aware that doctors’ paid by MetLife ignored :

(a) Ms. Jacquelyn Addis’s Multiple Sclerosis,

(b) A foot that new mother Joanne Vick broke in five places,

(c) Cardiac conditions of many patients,

(d) And repeatedly endangered psychological patients to the point that U.S. District Judge Richard Enslen wrote :

“Metlife and its henchmen should appreciate that such conduct may itself precipitate the suicide death of a person who has placed implicit trust in their organization. This record is an open indictment of MetLife’s practices and treatment of the mentally-ill and long-term disability benefits.”

** Quotes from numerous Judges that Obama"s DOL and DOJ Directors have ignored are seen by pasting :

deadlyorganizedcrimes.blogspot.com

Even though my complaint in 2005 led to State Senator Ford’s conviction, I believe it’s likely the U.S. Attorney and Local D.A.s will try to block prosecution of Government officials that is submitted by Grand Jury members, but I pray someday a real Grand Jury full of honest citizens will achieve prosecution of the officials who protect corporate crimes that are destroying the lives of hundreds of millions of people in the world !!

I pray many of the Propublica commenters or someone they know will be on a Grand Jury soon !!

Fiona Mackenzie

Oct. 27, 2011, 2:45 p.m.

max—Thanks for your clear analysis.  That’s what makes reading the comments worthwhile.

No discussion can be complete without including the role played by Barney Frank, Chris Dodd, and Ken Conrad.  Just because they are Democrats doesn’t mean their hands are clean.  This is not about what banks allegedly did.  It is about the pursuit of power by corrupt politicians addicted to money.

Congress lives inside a beltway echo chamber and seem to have little knowledge of what is going on in the rest of the country, nor do they care. The ONLY thing they care about is M-O-N-E-Y. Screw the constitution and Americans, just hand the politicians their lobbyists’ bribes.

Herman Christian

Oct. 27, 2011, 11:49 p.m.

The SEC and the CTFC ?

Both have recently let JP Morgan off of the hook for close to a 127 million ounce silver short position that should have taken them down or into recievership at a minimum. They and some of their associates have screwed to the wall small and mid tier investors for two decades from naked shorting to who knows what else.
Just when we thought some of the rotteness would get their due for these crimes, low and behold another quiet rabbit out of the hat relieving them of their underwater short position !
Enough is enough !Tthe bets are off the table on what will happen in this enviorment of no accountability. Directors of the SEC and the CTFC, YOU both should give the tax payers back their money !
Simply disgusting.

Thank you for this monumental report.  Excellent.

The MSNBC website says “Rachel Maddow reviews the recent history of Wall Street dishonesty that defrauded investors and ultimately destroyed the U.S. economy.” Unfortunately, there is a critical part of the history that Maddow has left out. The Obama administration has refused to prosecute the fraudsters. Until she indicts Obama for this, and demands that the fraud investigations begin immediately, she and her big-corporate network are part of the 99%, not the 1%.

I believe Greenspan set up a consultancy after he left the Fed and received lucrative contracts with several of the firms involved in the crisis and the bailout.

Annamaria Amenta

Oct. 30, 2011, 12:26 a.m.

I would like to see mention of John Thain, in particular. He and his cronies looted Merrill Lynch of 20 billion in early bonuses as it was being taken over by Bank of America with taxpayer money, after driving it into the ground. Now he’s running the CIT group, instead of being in jail.

The problem is not JUST the greedy bankers who are willing to subvert ethical and moral obligation in the name of profit. It’s the federal government who creates huge pools of funds to be lent, and then doesn’t do enough to make sure the greedy banker doesn’t lend it to people who it shouldn’t. I say stop creating the funding pools. B.O. is trying hard to create a pool of funds for lending to students. Funny how certain companies are already pushing loans on students thru aggressive selling. There’s already a mini crisis exiting in the student loan world. When are the idiots at the fed, going to realize that money doesn’t come from the printing presses, and they can’t bail out failure.

Fiona Mackenzie

Oct. 30, 2011, 3:22 a.m.

You must be thrilled (not) then, Annamaria, that [in the tradition of too big to fail] the Fed has recommended that Merrill Lynch’s bad derivatives be transferred to Bank of America.  Apparently the reason is that when it implodes, the Fed would rather the loss fell on taxpayers (FDIC) than on the Fed itself.

Begs the questions:  Why are investment operations and deposit banks still not walled off from each other?  Why are we still trading in bad derivatives?  WTF is it still set up that the depositors (FDIC) end up paying off big investors for the screw-ups at the Fed—haven’t we learned ANYTHING?

jon.e.b.good@hotmail.com

Oct. 30, 2011, 5:10 p.m.

Time to dismantle K Street. The lobby industry has to go, they are the bag men for the financial and other special interests that is not the 99%. The numbers are staggering $2.7 billion plus $1.0 billion in campaign contributions. K Street has to go

Unfortunately, it seems the financial reform legislation didn’t include mandatory funding levels for regulation enforcement.  Was this the price of passing the legislation?  Laws are only as good as their enforcement.  We have many law breakers (and those who’ve witnessed them) who’ve learned they can do so, enrich themselves and get away with it.  We need to fund the federal enforcers or else perhaps State Attorneys General can go after the crooks?

Fiona Mackenzie

Oct. 30, 2011, 7:45 p.m.

Yeah, we very cleverly gave them enough hard-earned taxpayer money to allow for multi-million-dollar bonuses, accompanied by no quid pro quo at all.  And now the voters are just panting to elect a corporate-owned teabot to the presidency, to match the ones they put into seats bought by corporations in 2010. 

Voters are so generous, except to us, who are themselves.

@Fiona Mackenzie-You bring up some very important points that many taxpayers are unaware of. Glass-Steagal would have made this impossible (Merril Lynch transferring 75 BILLION to BoA, so as to be able to collect on the CDS’s WE the American taxpayers will ultimately pay for). Commercial and investment banking MUST be seperate. When will this BS end?

Fiona Mackenzie

Oct. 31, 2011, 1:27 p.m.

Bottom Line:  So long as there is EITHER a Republican House OR a Senate with more than 40 Republicans OR a Republican president, there will be no real change.  We are locked into not just “too big to fail” and the banks’ tube into our bloodstream, but also the consolidation of half or more of our economy in the hands of 1%—the bulk of it in 0.1%—of “Americans,” primarily multinationals, 

Historically, a bad and degrading situation like this has resulted in election of more human-oriented officials and/or a comprehension by conservatives that something must be done, and at least some cooperation (although the situation has unidimensionally deteriorated for 30 years or more, this time without an epiphany).  We have never faced quite this situation before.

At the time of the Great Depression, the American Nazi Party and other segments pushing for absolute corporate control were wealthy and strong, but the people responded with unions and organizations like Workers of the World, and although it took a couple of decades, balance was restored.  [The WWII magical thinking was totally NOT the cause of recovery; it was the whole fight put up by the government and people.]

Our version of the autocracy of that day, the American Legislative Exchange Council—some of them direct descendants of those who nearly succeeded in the Great Depression—has been much smarter and will very likely succeed.  They began underground, achieved (probably through voter fraud, which they now practice regularly without concealment) eight years of an administration and Congress that turned over to them enough of the American economy to tilt it and start the rest sliding into their coffers. 

They have created a “political party” by pulling together the fringe element of the Republican party (sociological study has confirmed that these are the extremist agitators that the GOP has previously managed to keep sidelined).  Thanks to Citizens United (evidently, we now are learning, bought from the most corrupt SCOTUS in a century), they have been able to buy congressional seats and fill them with malcontents whose sole virtue is that they can be counted on to vote as a bloc, as instructed.  When those people walked into Congress the first day (shown on the news), they said that any regular Republican who voted against them would not be there in two years, and sat down to destroy the American government and establish a fascist oligarchy.

Unlike in the past, there won’t be any desertion from the ranks.  So long as there is Republican majority dominated by a faction that is willing, is in fact sent there to perform brinksmanship and possibly bring down the United State government as we know it, or a Republican president who will not be elected unless ALEC knows what he will do, our situation will not improve.  We are scheduled to become a large poverty class and a very, very small hereditary oligarchy, and we are very nearly at a point of no return right now.  And because money buys votes, very cheaply in fact, and there’s lots of money, this won’t change.

What was the question, again?  :-)

one of the best articles i have ever seen on the crisis. great job.

also would like to add the Monoline insurance companies (AMBAC, MBIA, etc), the mini-AIGs who sold CDS after AIG quit in late 2006 -  all of them are trashed now and the municipal bond ‘insurance’ racket is forever changed.

Where is Barney Franks? He had a hand in making the bubble bigger, and then it popping!

Fiona Mackenzie

Nov. 1, 2011, 7:38 p.m.

Keep looking under rocks for Dem responsibility for this, Rodney.  You won’t find it, and you will label yourself as a troll.

Right now, the issue is failure to recover, and we are failing to recover because of deliberate, organized, concerted corporate action.  The two most destructive pieces of corporate action that are enabling it to bring down and permanently destroy the 99% of the U.S. are (1) Citizens United and (2) the purchase of Congress thus enabled, packing both houses with teabots invented by ALEC, voting as ordered, and willing to make major threats to control the votes of normal Republicans.

That’s it.

Fiona, you are incorrect at least to what Rodney was trying to say.

This article is about 95-99% correct except that it excludes the history of the Frank-Dodds actions to influence and get Freddie Mac and Fannie to lessen the requirements to obtain a mortgage.  The end product was a no-doc or low-document mortgage.  The changes to the mortgage underwritting rules allowed a person (or people) to purchase a house simplge by “stating” their income.  No real proof was required. 

I know this because I had to accomodate it in the software we provided to 10 of 10 of the largest mortgage companies in the US from the mid-90’s onward. 

Like I said, this entire story as posted is incomplete—it is missing the origins of this entire issue.  If it weren’t for the allowance that these provisions allowed then the further abuse documented in this article would not have been possible.  They both occured.  Both means the rape from the banking system as allowed as well as the crazy loans allowed from the Frank/Dodds rule of the 90’s that started the mess.

I understand the the no doc loan issue and some of the ramifications
that have manifested throughout the system as a result. I undertook a
no doc loan to utilize the equity from my home for different
projects.The caveat I had however was a solid investment portfolio
that contained double the amount I needed to pay that loan in full
whenever I chose.There are many I know that had the where withal to do
the same. What we didn’t factor in was that in August 2008, two large
investment banks ( maybe more ) were allowed with the Treasury
leaderships blessing to illegaly naked short our holdings into the
dust within seven days. The resulting long class action suits that
resulted from that had bastards like LLoyd Blankfein and Henry Paulson
holding up thier hands and saying we have immunity as we were acting
on behalf of a government entity. Otherwise, we can.t be held
responsible for what our actions caused because it was blessed by the
Treasury department.
Now, the game as it appears is this. The banks are pretty much the
only game in town to obtain operating capital.The system was created
around them and their activities and sold as the legitimate route to
obtain capital. I agree to your userous rates you are allowed to tack
onto my loan and believe in paying my debts to the system. Then, the
game is changed so that my avenues to repay that loan are severely
restricted or taken away completely. Then you want me to pay you like
nothings changed and everything is as it was ? Well, I and millions of
others don’t think so and believe you can fix what you’ve broken or go
rot in hell. When I found out the entities that hold my note have been
paid more than twice for the same loan already, I became unglued on a
system that needs a huge amount of overhaul and Government oversight
agencies needing cleaned from ex-banking cronies that contaminate
them.
Pardon the rant but I still say to hell with them all and jail at a minimum.

Herman

Fiona Mackenzie

Nov. 2, 2011, 12:31 p.m.

Probably the only way people like Herman and me could have escaped the initial consequences of the crash was by never owning anything, never trying to grow our estates, never participating in the market.  But those people are now unemployed without assets and struggling for survival.

Or, in the alternative, we could have invested ONLY directly in mega-corps, which we didn’t do because we had no way of knowing they could and would destroy the entire economy and walk away with America’s wealth.

Hanging everything that has been done by those entities purposely to defeat recovery of the middle class economy onto some factor that may have contributed to the original problem (but had little to do with the corrupt securities that ultimately triggered the crash) is an incredibly warped viewpoint, childishly simplistic and dishonest.  Politically motivated at the expense of intelligent analysis.

@Lexie Ellwyn

Are you suggesting that we prosecute the amateurs and set the professionals free? If not then what is your point?

If financial documents are misrepresented the majority of Americans will put their trust in the professional. Our degrees are in other disciplines, our hobbies (working for a living) do not allow us time to study complex financial terminology. We depend on honest representation from our lawyers, doctors, plumbers, electricians and bankers. Any member of any of these groups has the ability to lead us astray.

BTW: Have you checked the drainage beneath your A-coils lately?

Jail the bankers who made the loans without establishing the applicants’ ability to pay and then sold them as mortgage-backed securities. It should be easy. They all signed as they collected salaries, commissions, and bonuses. Then jail their bosses who set policy. “I was only following orders” is not a defense.

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