Mukasey’s Whack-a-Mole Mortgage Fraud Approach
For some reason, Michael Mukasey doesn’t want to investigate and prosecute mortgage fraud using a comprehensive, centralized approach.
Attorney General Michael B. Mukasey rejected on Thursday the idea of creating a national task force to combat the country’s mortgage fraud crisis, calling the problem a localized one akin to “white-collar street crimes.”
Mr. Mukasey made clear that he saw the mortgage fraud problem at the root of the nation’s housing crisis as a serious one. But he said he was confident that the Justice Department’s current approach — using local prosecutors’ offices around the country to oversee separate F.B.I. investigations — was adequate.
Since he took over as attorney general last November, Mr. Mukasey has grappled with how best to deal with the law enforcement side of the growing housing crisis. He said in March, for instance, that the Justice Department was still struggling to determine whether there was a “larger criminal story” behind the housing crisis.
He gave his most definitive answer on Thursday in a briefing for reporters, saying that he did not think that the kind of national task force created at the Justice Department in 2002 to investigate the collapse of Enron was “the proper response” to the current crisis.
[snip]
The Federal Bureau of Investigation is investigating 19 major corporate fraud cases related to the mortgage crisis. The targets of most of those investigations have not been disclosed. In addition, the F.B.I. has 1,380 small mortgage fraud investigations now open in field offices around the country, a sharp increase over previous years, officials said.
Now perhaps there’s a very good reason to keep these investigations localized. But the cynic in me thinks that a centralized approach might just demonstrate the need for increased federal regulation on the lending industry.
Mukasey is the Chertoff of justice. His job seems to be issuing press releases explaining why the DOJ should not do any investigating into anything. And he does a shitty job of that too.
Just another example of cronyism, by that I mean keeping it safe so the left hand doesn’t know what the right hand is doing. That enables him not to prosecute his buddies and get away with it, Oh just one bad apple out there doesn’t rise to the level of really serious problem, that the MSM has blown this out of proportion.
EW,
Thank you for all your posts yesterday and your posts up today. Pure excellence in investigative blogging/journalism. I only had time to lurk…end of school year for the kids.
Now, for this post. In talking with Ohio Treasurer’s Office and Ohio AG’s office, the mortgage issue, according to their offices is about to get even worse. I wonder if the states are so deep into their investigations of lenders on the state level that Mukasey thinks a centralized approach would “muck” it up, so to speak?
On the other hand, these staffs seemed so over burdened by work irt mortgage fraud that I would think the states would be demanding it (central federal investigation) in order to allow their staffs to get back to the pile of other work usually done day-to-day.
Is Mukasey vying for a Supremo job if McCain (perish the thought) is
elected?
Appears to me that he’s vying for obstruction charges down the road.
Mukasey is very well-trained lapdog. He knows how many beans makes five. He knows his bosses do not heart regulation.
I didn’t see a link to the Lichtblau article, so here it is.
Just to clarify a little here–the fraud under discussion here is not the kind of liar-loan fraud where schoolteachers claimed they made $250,000 a year on their mortgage applications. It certainly happened, but banks did not rely on these income statements anyway. That kind of fraud did not contribute substantially to the housing mess.
The kind of systemic fraud that may have contributed substantially is in the securitization of the mortgages by large-scale lenders, and systemic misrepresentation of the loans to borrowers.
Mukasey I think is trying to avoid investigating the second and third by replying that the first wasn’t a big deal.
Spot on. This is more than a few small bad actors using sharp practices, but large Corps. smelling large profits, consequences be damned. If the DoJ did a coordinated investigation, it’d make it more difficult for the Fed to prop up the guilty Companies with sub prime loads or debt forgivenss.
I agree with this. The most likely lawsuits are going to be by investors against the rating agencies and against the sellers of securitized mortgage instruments for intentionally lying about the pools. There is a lot of evidence that they knew what kinds of crud they were selling, and just didn’t care. The sellers didn’t even do their own due diligence. I read that Countrywide had several rooms where they would put outside contractors to review files at something like $350 per mortgage. The idea was that the due diligence guy would look at maybe 5% of a pool, allowing 15 minutes per file. Good luck with that one. No wonder there was so much crud.
It’s “just business.”
The Administration wants to avoid creating a precedent where judges can “legislate from the bench” and reduce/tinker with individuals’ mortgage rates, terms and debts. While this power could save the whole system, they will have none of it.
While individual judges can change the terms of a vaction home mortgage, or debt on cars, boats, etc, judges are powerless to tinker with mortgages on primary residences. And that’s where most of working class America has their problems.
Instead individuals are dependent on the willingness of banks to “work it out” or they have to go to foreclosure.
The reason? Probably because most every mortgage is a piece of a larger mortgage security held by investors/hedge funds/etc. To tinker with a primary mortgage and re-set terms favorable to the borrower would mean that whomever holds the underlying bond takes a financial hit. Many of these things are worthless anyway, but the holder continues to record them at full value.
All to protect a shaky balance sheet.
Read these posts and decide for yourself if a federally funded investigation is needed. I think in the end we will find that the Saudi’s are behind some of these companies.
http://www.ripoffreport.com/re…..296886.htm
http://www.ripoffreport.com/re…..245963.htm
http://www.loansafe.org/forum/…..ncial.html
http://homecomings-financial.p…..113659.htm
http://www.complaintsboard.com…..33204.html
There are literally thousands of stories like these. These are not legal behaviors. The behaviors of these banks are not being stopped by anyone at this time. These complaints are all regardings Homecomings financial, a subsidiary of GMAC. They include people who’s loans were bought out by Homecomings and then given inaccurate statements. There are billing errors, errors in the application of errors, escrow errors.
The feds and attorney generals are doing little to stop this behavior. On the fed level, the complaints may be too numerous to sort out. On the local level, some of the A.G’s are in on it. There are house flippers taking advantage of these situations hence the signs “we will buy your house” on every corner.
We need a federal investigation
Do we have a financial genius here who can lay out the form of the big kaboom when it comes? Or if it turns out to be a (slower) meltdown, what we are likely to see from the perspective of a regular job guy with 2 kids and a Chevy pickup.
This admin has for years acted/appeared as if a big event is coming soon which will 1) destroy the economy, and 2) keep the lizards in power forever or at least until the event is complete, after which all pretense of govt by the people is gone for good.
To Prof Foland @7, thanks for putting it succinctly. I still don’t get what is exactly the point of this systemic fraud, unless it is precisely intended to cause economic collapse. ( My personal opinion.)
Worthless mortgage backed securities sitting at full value on balance sheets across the US and world. In hedge funds. In retirement accounts. In sovereign wealth funds.
Time bomb. Oh, yeah.
But the cynic in me thinks that a centralized approach might just demonstrate the need for increased federal regulation on the lending industry.
Yeah, except solely for the fact that each day’s headlines make that need so incandescently obvious that even some who formerly made their bones arguing against it feel compelled to pay the idea lip service.
There’s a whole pod of Moby Dicks out there that Mukasey probably doesn’t want found on his watch, as they almost surely would be if too many attorneys were allowed to sail the waters freely. I’m not really trying to be facetious to suggest that the admin would rather we thought they were about to bomb Iran than that the public at large really got a clue just how bad this financial thing is.
Or, what Prof. Foland said, at the very least. It could be a lot on the Fed’s plate if several things were to jump off at once, with or without an obvious fraud involved.
Everyday people? Don’t buy real estate for a while (no snark intended), and look into getting your cash into bank accounts under the $100k insurance limits; financial advisors should know how you can do it using several accounts or certificates.
Does anyone know what mafia family they got him from? Does he work for both his godfather and the country, or did they work out a lend lease?
Courtesy Calculated Risk, Backstage at a Bank Funeral, or how the FDIC rolls out to close a failed bank and get ready to reopen it under supervision.
During the 1980s there were actually 2 banking/s&l crises, one roughly 1981–1982 and the other 1989 into the early 90s. They run together, partly because it took a while for the fallout, such as bank/thrift failures, to play out. In the heart of the eras, 1981–1993, about 2,887 banks and thrifts failed (there were a lot more of them then than now), but no one who had an FDIC- or FSLIC-insured deposit lost their money, and most had very little interruption in access to it. I know there were some losses to uninsured deposits, but don’t have it handy; the feds made good on a portion of those.
Hey, you left a link to http://www.publicaffairsbooks.com a few days ago – thanks!
The analogy that I find most helpful to think about the mortgage mess is of a Google Map, where at each level you can zoom in/out. Part of the confused conversation about the mortgage mess arises because different people are looking at different ‘altitudes’. The dynamics at the individual level are very different from 20,000 feet.
In an era when people are viewing ‘investment’ properties over the Internet, and moving money across states and national borders, Mukasey’s approach is about as useful as putting a tricycle wheel on a semi truck and expecting it to haul a 4 ton load from Denver to Miami. Either he doesn’t understand the technical problems, or he’s protecting someone(s).
Financial models aren’t working.
Wall Street and the mortgage markets will bleat to the politicians to keep their bogus businesses on life support; meanwhile Wall Street uses the Fed to try and bail itself out via the commodities markets — a shell game likely to exacerbate the end of the financial era that took form under Reagan, GHWBush, Baker at Treasury, etc.
It’s the psychology of Enron on globalized steroids; driven by speculation and greed.
Consequently, it’s not sustainable.
Maybe the best thing to do is hold a nice funeral, shed a few tears, and then get excited about better economic models.
For the answer to “Why is Mukasey slow-walking, stalling and avoiding a national investigation of the mortgage mess?” (which, I understand, is a main question raised by this post), how about this for an answer:
Sometimes, I guess, the simplest explanation might be the right one. That obtains here.
This sounds like a serious attempt to cover-up what should be a bigger-than-Enron fraud scandal by banks and mortgage lenders. Calculated Risk wrote about:
“JPMorgan Chase memo titled “Zippy Cheats & Tricks”. The Oregonian obtained a copy of the memo, and the memo apparently offers tips on how to get loans through Chase’s in-house automated loan underwriting system:
“If all else fails, the document states, simply inflate the applicant’s income. “Inch it up $500 to see if you can get the findings you want,” the document says. “Do the same for assets.”
“Mortgage Fraud” is an overall description title that includes many different schemes as methods that provide fraudulent opportunities. Who’s involved that I’m aware of are also the Banks. I know from the family I was in for more than 26 years that they laundered Drug and Gun Running money straight into Property using high level Administrators in Trust Departments in big Banks. They didn’t learn to do this by themselves and were instructed by criminal groups associated with the CIA. The family eventually became a CIA Asset which was bragged about when I questioned what might happen if they got caught.
Attorney General Michael B. Mukasey either knows that this is one of the main methods used to launder money by criminal factions within and linked to the Federal Government OR he is being instructed not to go there.
As an example, I know personally from the family that Dubai is heavily involved. Don’t forget that they currently have a huge building boom going on within their country. However back around 1990, I was told that Mandarin Oriental Group has board members who have MOB affiliations and is where a large amount of stolen US Tax money goes. Mandarin Oriental Group is owned by “Sheik Mohammed bin Rashid al-Maktoum” who also owns “Dubai Ports World of Peninsular & Oriental Steam Navigation Co”. Do you remember the Dubai port scandal earlier during Bush’s administration?
The Chicago Tribune did an investigation on Mortgage Fraud that later made it appear when you read it that the culprits were small time lower level administrators. I tried to post what I know and every attempt was deleted. When I find the links I’ll post them because I just tried searching on the Tribunes site and Google and they aren’t coming up. Per the family, the Tribune and Sun-Times both have CIA operatives working within the companies who’s job is to make sure bad news doesn’t surface. My posts explained the relationship the big Banks have with the Newspapers to cover up the huge Laundromat pointing to the inequities described in the article. Beware though that there are also other CIA operatives working at Radio stations and other News Papers as well. It’s important to remember that the NET involved here doesn’t stop with just what was explained above. It’s huge and provides security for all the high level people involved. It continues into other areas that when they surface will totally amaze everyone. Hence because this topic is so huge, it makes perfect sense for Mukasey to steer away from it.
There’s a lot more to this as it also includes protection and security groups who oversee the Laundromat. This is another area for another time and includes many murders and attempted murders. You can ask a friend of mine who’s close friend of 10 years was murdered by this group.
Marty Didier
Northbrook, IL
If you read some of the thousands of complaints by individuals (and I do understand the distinction between the macro and micro level here) you will find that taking an a mortgage bigger than one could afford is not the issue. Over and over again there are posts about misapplied payments, about bought out loans and new balances appearing out of no where, about fees being assessed with no explanation, about payouts being incorrect and not having time to straighten them out.
Do you know what to do if your lender suddenly says you owed 20$ in back payments and you know this isn’t true. Let’s say you have a sale on a house pending and you just want to pay off your loan and buy your new house. There are stories of people getting a pay off number, having the loan bought out, then buying a house going to pay off the loan and finding out the pay off has increased by 20k. What do you do?? You call the lender, but what if the lender will not take your calls and you blow a week trying to get a hold of someone. Then what do you do?? Contact who? It takes time to figure out the next step. I went to the FDIC (6 weeks turnaround, the attorney general-have to have 4 weeks to investigate before they get back to you, then that takes two weeks) in the end time is money. While all this is going on you will be accruing fees. Do you know there are no laws to protect the you in regard to miscellaneous fees? Congress had it written into several different versions of bills but it was nixed each time.
If you are going through it, it feels like someone walking into your house and stealing your security. It’s an awful feeling. The fight is not easy. And do you know who most people automatically believe when you tell them that the mortgage lenders says you owe more than you do?? It isn’t you. They will put you off assuming that the lenders have better accounting than you do.
They have huge teams of lawyers who have already cut their teeth in class action suits finding every loop whole. There is only one way to end this night mare and it will require a full scale investigation and probably some kind of intervention. On the macro level it’s all a shell game with no pea.(in the pod)
There’s something exceedingly important to my post that needs to be added…
I’ve stated this many times in the past that we are involved in another White House Coup. It’s been in the planning for decades with small changes here and there waiting for a special day they call “The Change”. As they say, “When the Change comes, you’re either with us OR you’re not!” However regarding the Mortgage Fraud question, “Black Op’s” for the Coup are funded in large part by a huge Drug system that my exwife’s family is directly involved in. The Drug system is Globally massive and all elements involved are protected by corruption from the point of origin to each and every destination.
Links:
http://www.madcowprod.com/
http://narconews.com
Reporter: Bill Conroy
My ex-sister-in-law’s brother “Clyde O’Connor” was busted in Seeptember in Mexico with ~4 Ton’s of Cocaine and he is still at large to this day. The family hasn’t shown much interest in wanting to get out probably because they feel as being a CIA Asset, they are exempt. Frankly, this insanity is changing also.
When you sell products ongoing to individuals, there considerations that need to be made since the security of the business is to be able to collect money on a regular basis. Guess who else is involved with making sure the client has enough money to pay?
Marty Didier
Northbrook, IL
First, don’t expect the Bushies to investigate the “haves and the have mores”. It isn’t going to happen.
Second, once the government decided (years ago) to help any private company which was failing, because it was “too big to fail”, it became somewhat of an open season on the government. You end up with extremely bad situations.
Third, as with individual mortgages and as there was for Bear Stearns, there must be a very large string attached to the life preserver, such that any firm receiving a bailout has to also accept large losses. If they don’t then it becomes uneconomical to save them.
Fourth, the ties between government, both political and intelligence, and corporations (rich individuals really) don’t always lead to disasters. But, bring in the crazy Neo-Cons and Bushies and Right-Wing ideologies and you have a system which runs amok in a second.
Our salvation, if there is one, is in knowing our friends from our enemies (foreign AND domestic) and keeping enemies out of positions of power. Even the recent stories of Michael Ledeen and Iranians comes to mind. Here was the government associating with or being used by a foreign government. It’s as bad as the dual-citizenship (US+Israeli) Neocons and what they’ve gotten us into.
It’s a Democracy, if you can keep it!
“Larger criminal story”? How about how the Bush administration kept the states from acting early on by saying Federal law superceded state law on the matter (per Spitzer’s op-ed)? And funny how soon after that Spitzer was pretty well shut up.