Sunday, June 10, 2012

Mrtg. Fraud 'Small Fries' The Preferred 'Low-Hanging Fruit' For Cherry-Picking Prosecutors; White Shoe Lawyer-Defended Banksters Continue On Free Ride

An excerpt from a recent commentary by David Dayen on Firedoglake:

  • Joe Nocera returns to the story of Charlie Engle today. Engle is a marathoner who participated in a liar loan during the housing bubble. The IRS – really one vindictive agent of the IRS – tracked him down, searched through his garbage, sent an undercover agent with a wire to get him to admit guilt, and coming up empty on any tax violations, prosecuted him for the liar loans.

  • It turned out that the mortgage broker inflated his income on the loan document after the fact. But Charlie Engle, not the broker, was prosecuted, and sent to jail. He gets out this week, still burdened with a felony record and five years of probation.

  • Nocera makes a very provocative but accurate point about how the Justice Department has conducted itself during the aftermath of the financial crisis. It’s not just about avoiding any prosecutions for the top Wall Street executives whose fraud led to the crisis; it’s about making up for that through prosecutions of the bit players [...]
  • Just this week, Abacus Federal Savings Bank, a tiny bank catering to the Chinese community in New York City, was charged with mortgage fraud, with 19 of its former employees put under arrest.

  • The suit charges Abacus with selling loans to Fannie Mae with false information. However, “nearly all of the Abacus loans were still performing,” according to the indictment. This contrasts with the millions of loans that went bad when big banks engaged in the same exact scheme, selling securities based on loans without revealing their underlying status.

  • Also this week, the SEC admitted that they would rather go after smaller firms for paperwork violations than the JPMorgan Chases or Bank of Americas of the world for the systemic violations of securities laws.
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