I think that’s pretty much the case with respect to reserve requirements regarding derivatives, although I’m not sure at this point how much was an actual loosening of reserve requirements and how much was due to the fact that the derivatives market was so new that there simply weren’t any requirements. I think it was a little of both but I’d be hard pressed to find a cite. The best I could do with a quick google was this pastiche from 2008
Could you please produce your evidence listing
[ul][li]Who, specifically, bought the loans[/li][li]How they knew that the loans were fraudulently obtained[/li][li]Who, specifically, they paid off in the ratings agencies[/li][li]What the payoffs were, and when were they made[/li][li]The dates on which this occurred[/li][/ul]
Could you also produce a cite from officials at the Treasury and/or Justice departments, in which they state that they have evidence of crime sufficient to justify indictment, but on which they have not proceeded because of a fear of undermining consumer confidence?
Thanks in advance.
Regards,
Shodan
Shodan: The phenomenon was so widespread and well know that there is a wikipedia entry for it - NINJA loan. I’m sorry to be rude, but just because *you *don’t know about something doesn’t mean it didn’t happen.
edit: I think AH is however incorrect about the Treasury recapitalizing the banks. They DID do that in a few cases but I believe all of those loans have been repaid. What they might owe the Federal Reserve in terms of paper they sold to the fed at perhaps a higher than market value is another issue entirely.
QUOTE=Shodan;16116664]Could you please produce your evidence listing
[ul][li]Who, specifically, bought the loans[/li][li]How they knew that the loans were fraudulently obtained[/li][li]Who, specifically, they paid off in the ratings agencies[/li][li]What the payoffs were, and when were they made[/li][li]The dates on which this occurred[/li][/ul]
I was going to post a couple dozen links but here’s a comprehensive page
http://www.sec.gov/spotlight/enf-actions-fc.shtml
And there’s this gem…
Could you also produce a cite from officials at the Treasury and/or Justice departments, in which they state that they have evidence of crime sufficient to justify indictment, but on which they have not proceeded because of a fear of undermining consumer confidence?
Shodan and Human Action: OT, sorry for being bitchy before. 
Lending rules were never relaxed.
There was a commercial fraud committed.
No prosecution happened because your Government is corrupted more than a cheap hooker in Panama.
You try to forge a cheque or credit card you will go to jail at least 6 months. You do insider trading and make millions you settle.
Read more - http://www.nytimes.com/2010/05/28/business/28pequot.html?_r=0
That’s what happens. Well connected dudes settle - you go to jail.
On a related note, I would love to see where did you read or who told you that there was no law broken? Because HBO is looking for some fantasy fiction projects to shoot thi summer.
Your link is an idiotic example- it’s dealing with insider trading and has nothing to do with the subprime lending crisis of 2008. Maybe if you bothered to look up how it happened, you’d have a clue what you’re talking about, instead of insisting it’s totally due to “my” corrupt government.
The whole thing started with predatory lending and the massive expansion of subprime mortgages, i.e. high risk mortgages that people have a hard time paying off. Things like adjustable rate mortgages, ones with large balloon payments, etc…
Had the MBS(mortgage backed securities) been composed of the usual 30yr/20% down type mortgages from people with FICO scores over 640 or so, the whole thing likely wouldn’t have happened in the first place.
That’s all true, but the single biggest issue was the fact that they qualified people on the ARM loans at artificially low “teaser” rates. So for example the actual rate might be say 6% but the first year teaser rate might be 3.5 or 4% and that’s the rate they would “underwrite” you at. Of course the very next year your rate went up to whatever the going rate was and bam - default.
You’re right in that they aren’t doing it so much TODAY but in the years following the crisis - during the time the banks were being fined – they did it to the tune of 9 trillion or so
Trillion with a T…or 9 million million dollars
This is a lot of money…enough to pay off every outstanding mortgage in the USA and to buy an average priced house for every family that doesn’t own one.
Then there is this little program which expired at the end of 2012 in which our tax dollars were used to guarantee repayment of loans the banks made to each other, removing all risk from the loan process
The deliberate issuance of billions of dollars in bad and even fraudulent debt was fueled by demand from the top down and is only part of the financial crisis story. The really obscene part of the scam lies in the techicalities of how these bad and sometimes blatantly counterfeit loans were packaged and sold, and how the large financial institutions reacted when they became aware of the problem… but that seldom shows up in the “Financial Crisis for Dummies” version of the story sold to the general public
Imagine if an auto manufacturer became aware of a fatel flaw in one of their products and instead of sending out recall notices they continued to sell the cars to unsuspecting customers… and then took out life insurance policies on those customers.
I recommend the following books for more juicy tales of malefesance
Neil Barofsky----------- Bailout
Matt Taibbi ------------Griftopia
Michael Lewis-----------The Big Short
Jeff Counnaght…The Payoff - Why Wall Street Always Wins
and the long but suprisingly readable
Wall Street and the Financial Crisis ---- by the Permanent Subcommittee on Investigations of the US Congress
which is available as a FREE Kindle download
A note to those who may feel my reading list is biased
I enjoy reading books about ALL viewpoints but I have yet to find a book supporting the conservative notion that the banks were forced to make bad loans by the Community ReInvestment Act and that the bankers were the heros of the story— only rather thin Op-Ed pieces. If someone can recommend a book expousing this POV I’ll gladly give it a shot.
And that’s a criminal act?
Look, I was trying to stay on topic which is: “Could we convict major bank and Wall Street figures?”
The link was supposed to explain that even very-obvious and clear-cut criminal cases when they involve well-connect Wall Street bankers tend to drag and don’t result in any jail time. It was an example of how your Government is corrupt and you still defy.
Also, I really don’t need you to explain to me how it all started for two reasons, one, even the birds on the trees sing about it by now and two, I was in the middle of it working for a big US bank at that time in risk department specifically attending to securitization. I know ALL about it.
What’s frustrating is this need to continually rehash and semantically re-elaborate the whole thing all the while carefully staying within a paradigm of incompetence and no laws were broken. Like you would know!?
Looking at cites Ann Hedonia is putting out one can only laugh how far from what’s happening people are. I mean, really… if I was AG or Treasury Secretary I’d laugh my ass off and go on with my life the way I intended.
Manipulation of securities market is one of the categories in criminal code.
Knowingly putting out on the market and obtaining profit from (in their words) “shitty” securities is a criminal offence. Or, simply fraud.
No? Should I brace myself for semantic storm after which I’ll confirm that you are right and I’m wrong?
Can you give us an example of some “ARM teaser rate loans” that meet the requirements for criminality under that statute? That is, something like the recipients of the loans were not told that it was an ARM or that they were not told when the rates were change?
I mean, ARMs with teaser rates are SOP in the lending business. You’re not going to find any major figures who don’t have lawyers making sure their loan contracts comply with the law.
So how did Iceland do it?
That link refers to a World Bank document that discusses general aspects of conduct and is littered with caveats about how specific statements therein apply (or don’t apply) to some jurisdictions.
Further, the “rules” discussed may be civil or criminal in nature – violation of a rule might be cause for a civil action against the actor, but not a criminal case.
So I’m asking for a cite to US Code, something that lays out a crime and the elements of that crime, together with an example of what conduct actually happened that is a violation of that criminal statute.
This summary of prosecutions is found on the SEC website…
Number of Entities and Individuals Charged 154
Number of CEOs, CFOs, and Other Senior Corporate Officers Charged 65
Number of Individuals Who Have Received Officer and Director Bars, Industry Bars, or Commission Suspensions 36
Penalties Ordered or Agreed To > $1.53 billion
Disgorgement and Prejudgment Interest Ordered or Agreed To > $756 million
Additional Monetary Relief Obtained for Harmed Investors $400 million*
Total Penalties, Disgorgement, and Other Monetary Relief $2.68 billion
- In settlements with Evergreen, J.P. Morgan, State Street, TD Ameritrade, and Claymore Advisors
That’s illegal here, too, of course.
Actual market manipulation.
So, they violated a statute limiting a firm’s exposure to a single entity, it seems.
Less information out there about this guy.
So, how did Iceland do it? They identified people who’d actually violated statutes, and prosecuted them. The same way we do things in the U.S.
I wasn’t talking about mortgage contracts. These all are a case of a separate fraudulent activity that is much more difficult to untangle but the fraud in that department was as widespread as robo-signatures. It’s volume, volume, volume!
Anyhow, I was talking about securities market where these and similar mortgages were packaged and sold. Such activity is the most responsible for furious multiplication of the markets valuation and thus size of assets.
Something like this - http://online.wsj.com/public/resources/documents/WSJ_GSQUOTES.pdf
The funny thing is, this is still in courts - http://therealdeal.com/blog/2013/03/18/supreme-court-wont-hear-goldman-sachs-mbs-appeal/
System works 
On a separate note, it looks as if any of Dopers ever read anything by Matt Taibbi. He actually packs it very concise and to the point so he might be a tiny bit too obvious for some.
No suprise here but I’m a huge Taibbi fan.
I stuck to official government sites for the most part when I was posting my cites earlier but these are much more entertaining and guaranteed to induce lots of recreational outrage.
On BOA
ON HSBC
On Goldman Sachs
And on all the sleazebags in general
Given that there wasn’t even a criminal prosecution of anyone at HSBC (and I think we can all agree that laundering billions of dollars for drug cartels is actually criminal, if proven?), it looks like the banks are pretty much prosecution-proof.