The Obama Administration, the 49 State Mortgage Settlement, and the Spin: A Study in Shamelessness

The Obama Administration, the 49 State Mortgage Settlement, and the Spin: A Study in Shamelessness

For some time it has been common knowledge that the Obama Administration has not filed charges against a single prominent “bankster.” Moreover, let us note that this has not been the unfortunate consequence of an oversight or simple omission. Heading off the filing of serious criminal charges has been much more complicated than merely limiting the number of Department of Justice lawyers assigned to investigate and prosecute serious fraud to a poorly-supported skeletal crew. There is much more to it than that.

To begin, it is hard not to act in the current political and economic environment. Just consider the massive evidence of fraud — besides the reams of paper and court documents, this includes the many witnesses who have spoken to the media, written testimonials or books, already testified in court on related matters, etc. — that is strewn across the nation, from sea-to-shining-sea. Consider even this partial list of crimes to be investigated. Accounting fraud screams out for action under Sarbanes-Oxley; loan origination fraud (including, by 2006, almost universal appraisal fraud); the robo-signing, forgeries, and post-dating of documents that for years were routinely submitted to courts during legal proceedings; the myriad of tax avoidance scams and lost paperwork that were a core feature of the mortgage electronic registration systems; the deliberate misrepresentation in the “Warrants and Reps” attached to the packaging and sale of mortgage-backed securities and derivatives thereof; and on and on it goes.

The simple fact is that all of these things have occurred and reoccurred because, as the criminologist and economist William K. Black has repeatedly pointed out, fraud was not an aberration at these firms, it was their core business strategy. With reams of evidence pointing to fraud and malfeasance strewn surrounding us, fending off serious prosecutions has required a non-trivial commitment of time, effort, and extensive ‘political capital’ on the part of the Obama Administration and its senior staff. Failing to act on this copious evidence took an exceptional act of will. But, they were up to the job.

Rest here…


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