There Oughta Be A Law!

[xthread]

In another venue, someone argued 'the people who caused the mortgage meltdown be in jail?!'

I don't know if any of you, dear readers, happen to hold that view, but, if you do, would you be so kind as to tell me, in general terms, who you think ought to be in jail, and in specific terms, what you think they should be in jail for?

Let me note two important things at the outset: remember that lying to people is usually only against the law if you're doing so to cheat them out of money (which is why Bernie Madoff is in jail), and it's unconstitutional to make laws that make something retroactively illegal.

Got your moral outrage ready? Go!

Comments

Re: Oops, you triggered a lawyer....

[xthread.livejournal.com]

How many humans do you think we're talking about? How large a fraction of the market? When I hear people say 'where are the perp walks,' I'm assuming they also mean, even if they're not saying, 'it's the fraud that got us in to this mess.'

Re: Oops, you triggered a lawyer....

[judith-s.livejournal.com]

That's an interesting question. There is very clear documentation that about 15% of the mortgages were fraudulently obtained (and the fraud was not by the borrower but by the broker or the bank), and that the bundling information was often falsified. But we'd need to prosecute to get more details (because discovery powers are a wonderful thing). Fraud was pretty prevalent (http://www.seattlepi.com/national/397690_fbiweb28.html).

Do I think it's a good idea to prosecute the little fish? Well, I'm fond of RICO; let's see if we can pressure the little fish to give up the bigger fish and see how far up the food chain we can trace the fraud. I expect it would reach quite high.

Re: Oops, you triggered a lawyer....

[xthread.livejournal.com]

15%!??! Across all income levels and market categories?!

Re: Oops, you triggered a lawyer....

[judith-s.livejournal.com]

Did I say that? I was talking about the overall levels. Obviously not the same levels of fraud across all income levels and market categories. I know this will come as a shock but knowledgeable purchasers and investors were much less likely to be defrauded.

I think it was a huge level of fraud, and mostly deliberately ignored by regulators until the housing market blew up. http://www.crime-research.org/analytics/mortgage_fraud0405/

Re: Oops, you triggered a lawyer....

[xthread.livejournal.com]

Am I missing something? Those articles are reporting loss levels of tens of millions of dollars and tens of thousands of cases of fraud.. which is a drop in the bucket in a Trillion dollar business.