Abacus Federal Savings Bank, a small bank with a major presence in New York City’s Chinese community, and 19 of its former employees have been charged with inflating the qualifications of mortgage applicants to meet federal loan standards, a scheme that prosecutors say brought the bank tens of millions of dollars in ill-gotten fees and sent hundreds of millions of dollars in risky mortgages to the investment market.
The indictment against the bank and its employees describes the sort of scheme that led to the financial crisis of 2008, when the risk of mortgages to borrowers was disguised and passed on to investors. As those mortgages went bad, banks considered too big to fail were brought to their knees and bailed out by taxpayers.
These mortgages were sold to Fannie Mae, Freddie Mac and other investors. Although we did not underwrite these mortgages, Citi did rep and warrant to the investors that the mortgages were underwritten to Citi credit guidelines.
In mid-2006 I discovered that over 60% of these mortgages purchased and sold were defective. Because Citi had given reps and warrants to the investors that the mortgages were not defective, the investors could force Citi to repurchase many billions of dollars of these defective assets. This situation represented a large potential risk to the shareholders of Citigroup.
Testimony of Richard M. Bowen, III page 2
I started issuing warnings in June of 2006 and attempted to get management to address these critical risk issues. These warnings continued through 2007 and went to all levels of the Consumer Lending Group.
We continued to purchase and sell to investors even larger volumes of mortgages through 2007. And defective mortgages increased during 2007 to over 80% of production.
So once again, why are we seeing the small fish who put up a few bad mortgages arrested while those big fish who admitted to stuffing the channel with 80% of their production with knowingly-defective product have not seen the same thing happen to them?
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Regulatory agencies always go after the little guy not only because of the political risk of going after the big campaign contributors and a desire to get a revolving door job with one of the big guys after leaving the agency, but because the little guys are much easier targets, thereby allowing one to much more easily improve their stats for job performance evaluations.
This makes the rage meter max out. The picture of employees, some who couldn't speak English, at a Chinese bank in NYC , being arrested when the rest of the city is far guiltier -The bankers and associates who did it and the rest who looked the other way, turns "no crimes committed" to "no crimes committed by bank employees whose banks have assets over 10B and make quality and quantity of political contributions of size and frequency to everyone".
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"Bring out your dead"-a new alternative to Health care reform
"november will be 5 years, staute of limitaions runs out."
What in the world makes you think they have stopped committing crimes. There was a study done that showed that humans will screw other humans ( figuratively and literally) if there is a good chance of getting away with it. The criminal enterprise known as Wall Street and it's enablers in DC see no reason to stop when there is no consequences. Surely no one believes that they have actually stopped? If not this crime ( too much new red tape) then brand new ones ( Face****?).
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"Bring out your dead"-a new alternative to Health care reform
Wow. Amazing. During an election year they are going after a one star bank for political votes. That way Obama can claim to be tough on banker crime. Look at the people who are in shackles for Christ sakes! They could be your next door neighbor living in a one bedroom apartment. And the Chinese folks are known for being obedient and going with the flow. So any repercussion from this will be non-existent. Most will probably plead guilty to lesser offenses so Obama will have some convictions on the books. In the meantime, the big boys laundered 100's of billions of narco dollars - admitted to it in civil court - and not even one was criminally prosecuted. Corzine, one of Obama's top campaign financiers, was in charge of a financial institution that absconded with customer funds that were purported to be in sancrosanct separate accounts. Has anyone been indicted for that? WTF kind of nation have we evolved into here?
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"Ammunition beats persuasion when you are looking for freedom." Will Rogers, 4 Nov 1879 - 15 Aug 1935
Where are the handcuffs for Pandit and the moron that ran Citi into the ground? These brokers and little banks were only putting out what the big banks and GSE's told them they would buy.
I spent several years in the mortgage business when I was younger. The suits I have read, the nonsense that has been passed around, etc. is as dishonest as it comes. Brokers and loan officers have always had to follow the dictates of the underwriter. There was a suit posted here about a year ago where a company purchased by Deutsche or another of those big Eurobanks had been repeatedly put on the carpet for making fake FHA loans. In my day, they would have lost their direct endorsement in a few weeks and the loans would have been immediately back on their books. A loan officer is like a kid looking for candy on halloween. They go to the houses giving out the Snickers bars, not the ones passing out the hard candy. They will get 2 or 3 costumes if necessary.
In fact, I brokered loans for awhile. I dealt with the imfamous Colonial bank in Alabama and at the time, they had a great system. I had to sign a transfer of the Deed of Trust, though I never really owned the mortgage and a promise to buy it back, which I could have never done. I would have never put anything in a file that was dishonest for that reason and the reason that I believed paper fraud to be among the worst property crimes, blew only armed robbery. if the paper in the system isn't legitimate, the system itself is corrupt.
There are so many levels of internal control in place in the mortgage process that none of this stuff should have gone through, unless the entire system was corrupt. THERE CAN BE NO, NO ONE KNEW. THERE CAN ONLY BE EVERYONE KNEW AND THEY ALL COMMITTED FRAUD. THE LEAST FRAUDULENT WERE THE ORIGINATORS, WHO ONLY DID WHAT THE PEOPLE ABOVE THEM RUBBER STAMPED
Those that aren't in the mortgage business or have never been, are generally clueless as to what happened. If this ends up with a few small fry being punished while those that actually ran the game get free, we are looking at a series of crimes that will threaten the very existence of the US and any legitimate business ever being done in the country again. The mortgage business was and is the ultimate "Mother may I" game. The originators do nothing the wholesalers and underwriters above them allow them to do. It is rare the file is totally fraudulent and something not catch the eye of the underwriter. If the underwriter is out of order, their superior catches their work. If the superior is out of order, the GSE or the bank above them catches their work. Bits and pieces get through, not the entire game.
The mortgage game was and is so big that it couldn't have been an afterthought in any TBTF bank. Next to the business of dealing in government debt or maybe attracting and servicing multinational corporations, it had to be the top rung. Whether we were talking about Bear or Lehman or Goldman (Paulson), Citi, BAC, WAC, JPM or WFC, operations and internal control had to be of utmost importance to the CEO, Chairman of the Board, Board of Directors, etc. It was the largest exposure these banks had. It was also the most systematically dangerous business in banking, meaning the regulators were lax as well and should be jailed as well.
Maybe this is the problem, the participation of the regulators in this mess? Who would investigate their own crimes honestly? No I said the criminal.
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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith
Looks like the regulators have taken a page from the EPA about lining up a few small fries to get the attention of everyone else. Too little, too late. Everyone knows the entire system is corrupt.
We'll have to change this video from "I'm Spartacus!" to "I'm not Jon Corzine!", and let the crucifixions by the Fedthugs commence. The Fedthugs will have to be careful, though - it's an erection year, and they don't want to inadvertently nail any big campaign contribute*****s.
BTW - I'm going to get as many licks in on the criminal Corzine before it becomes a felony to criticize him on the Intertubes.
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==== If it's true that "assault weapons" are "weapons of war" and don't belong on the streets of America, why do the police need them? Who are the police at war with?
Tesla
Posts: 15541
Incept: 2008-04-03
State of Disbelief
You're all not getting the point..it's an election year, and reports are about that Obambi needs more campaign bux...yet Fraud Street is primarily donating to Romney. So, what to do...
Aha ! Think ****cago style ! Kneecap the little henchman, stare the big boss in the eye and say, you get it too if you don't pony up.
Follow the campaign contribution trail...
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"Even a dog knows the difference between being stumbled over and being kicked." -Justice Oliver Wendell Holmes
"Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." -Samuel Adams
I doubt Wall Street gives a damn who wins the general, they spent the money to get Romney nominated so that November would be a win-win for them. This is just the usual SEC pretending to be regulators instead of accomplices, no reason to shoehorn politics into it.
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Fear of govt IS the government.. Statism is a pack of unbacked threats; If govt gets out of control, ignore it and go about life as you see fit. Where's your crown, King Nothing?
Bullionaire
Posts: 2220
Incept: 2007-12-21
Fear The People
I'm wondering how much of this is actually a result of some sort of crackdown on Chinese organized crime in NYC. I see today they also shut down 19 "corrupt" bus lines in Chinatown. Douchebag Mike even did a press conference from the sidewalk in Chinatown. I guess he took some time out from shoveling public money to RE "developers." The timing is certainly coincidental. Nobody knows what really goes on down there anyway....
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"Anytime a financial company can take your hard earned money and keep it for decades without promising a set return, and even penalize you for early withdrawal it is a con. America has been conned by the whole 401K concept." - Ignorance Is Bliss, from a ZH comment section
