It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
This investigation has the potential to be a Mother of All Nightmares situation for the banks for a couple of reasons. For one thing, the decision to go after the securitization process is a total prosecutorial bullseye. This is the ugly heart of the wide-scale fraud scheme of the bubble era. Again, the business model during this time was a giant bait-and-switch scam. Sleazy lenders like Countrywide and New Century first created huge masses of bad loans, committing every conceivable kind of fraud to get people into loans (from doctoring income statements with white-out to phonying FICO scores to engineering fake appraisals). They then moved the bad loans quickly to the big banks, which pooled them and chopped them up (this is the “securitization” process), sprinkled hocus-pocus math on them, and them sold them to suckers around the world as AAA-rated securities.
Originally posted by dolphinfan
reply to post by Julie Washington
Its nothing but a show trial to enable Obama to be able to point at a couple of gents in tennis court prisons and spout nonsense about how he is all about justice and getting tough on Wall Street.
The Obama administration is currently pushing for more subprime loans because the poor and minorities are not getting credit. That essentially forces banks into a bad debt portfolio and financial engineering to escape redlining.
The administration has done nothing with respect to legitimate regulatory reform in the wake of this crisis.
They have not addressed the issues with respect to conflicts of interest inherent with the current indepentant rating industry.
They have not addressed the perverse accounting ramifications of "mark to market" valuation of loan portfolios which force banks to secure bankrupcy.
They have not done anything to regulate the level of risk management and oversight over derivative portfolios.
They have done nothing to ensure better transparency into debt instruments.
They have done nothing from preventing ERISA qualified pension accounts to hold trash debt and securities that the holders of those pensions can not begin to understand.
They have done nothing to stop the revolving door between Wall Street (particularily Goldman Sachs and JP Morgan) into senior positions in the administration.
They have resisted any legitimate audit of the FED.
The administration has failed miserably in doing anything which would even come close to correcting the underlying systemic problems that led to the crisis. They will, of course hold a couple of hearings and push out some sound bites and as the OP states, toss a few marginal folks in jail.
If anyone is buying this BS about the administration getting "tough on Wall Street" they are kidding themselves. This administration and the 5 administrations before it ARE Wall Street.