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FBI discovered the sub-prime fraud in 2004! Possible Cover-Up?! Conspiracy?

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posted on Feb, 26 2009 @ 09:59 AM
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The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds. When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.)

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.

Don't ask; don't tell: book profits, "earn" bonuses and closet your losses

The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative.

The second document everyone should read is Fitch's report on what they found.


Fitch's analysts conducted an independent analysis of these files with the benefit of the full origination and servicing files. The result of the analysis was disconcerting at best, as there was the appearance of fraud or misrepresentation in almost every file.

[F]raud was not only present, but, in most cases, could have been identified with adequate underwriting, quality control and fraud prevention tools prior to the loan funding. Fitch believes that this targeted sampling of files was sufficient to determine that inadequate underwriting controls and, therefore, fraud is a factor in the defaults and losses on recent vintage pools.


Full Article Here


i'm sure the government doesn't want this to get out to the mainstream ... i don't know ... do you think it could be the means for a possible cover-up/ conspiracy? i think so! the people who were lining their pockets didn't want the findings to get out so they could keep getting richer, even if it meant driving the country into the worst financial situation in a long time ...

[edit on 26-2-2009 by baseball101]




posted on Feb, 26 2009 @ 10:16 AM
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Doesn't surprise me at all. Any thinking person would quickly realize that Wall Street was 100% behind this debacle from the get-go. The Gov't had the responsibility for oversight. Quite clearly theye were either derrelict in their fiduciary respnsibility or malfeasant. Either way, there is culpability. Make not of this article (and others like it). They may become very useful down the road.



posted on Feb, 26 2009 @ 10:44 AM
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reply to post by jtma508
 


yeah, i agree ... i just wonder why this is all coming to light now ... 5 years later ...



posted on Feb, 26 2009 @ 10:52 AM
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That's easy. Look at who was making Billion$ from the fraud. Look who got bailed out when it all went bust. They are bed partners with the major polticians. Back in July 2008, both BushCo and McCain were saying the 'economy was fundamentally sound'. Now why would they say that? Either A) they were both stupid enough to believe it when there were warning sirens blazing for years at that point or B) they (just like Enron) wanted to continue the scam as long as possible.



posted on Feb, 26 2009 @ 12:11 PM
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I will flag this.

The banks were giving houses to people with very poor credit and bankruptcies on purpose hoping they would default and give the house back so they could sell it for even more as the price increases.

You know if it is fraud when you get a month behind, and you ask them to work with your payment for a month. If they get mean and change their game and say you have to pay now or loose your house, it is a plain giveaway.



posted on Feb, 26 2009 @ 01:53 PM
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The money defrauded of the consumer is the same as is used to run political parties.

Political appointees are the leadership of the justice (and regulatory) systems.

Means. Motive. Opportunity.

Seems clear that every time there is a 'delay' of some kind in the truth coming out, someone has "gotten away with it".

The media doesn't touch it until the players have already resolved the matter. You see - it's them who are charging the money that makes it possible to run for office. It's a kind of incestuous vicious circle of graft and cronyism. The kind of thing our elected representatives and public officials "swear an oath" to protect us from

- on their way to and from the bank, that is. [/sarcasm]



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