Streams

Prosecuting Mortgage Crimes

Tuesday, January 31, 2012

Gretchen Morgenson, business reporter for the New York Times, continues the conversation about going after after mortgage fraud and other financial crimes. Listeners, what do you think? Where would you start when it comes to investigating financial crimes that led to the 2008 collapse?

Guests:

Gretchen Morgenson

Comments [20]

Eugenia Renskoff from Brooklyn, NY

Hi, I would appreciate, more than anything else, to get the money that I lost because of mortgage fraud, predatory lending and foreclosure. That, to me, would be real justice. Eugenia Renskoff

Jan. 31 2012 01:30 PM
Jack Jackson from Cental New Jersey

Well, the growth in home prices during the Bush Administration was no secret...Housing prices and the stock market were the only economic 'wins' that this administration could claim.

My wife and I were house hunting in 1999, and lost our bid to a beautiful place on New York Avenue near a hospital. The house sold for $225K. Six years later the SAME HOUSE was back on the market and SOLD for $499K! Seen any reality shows about subprime mortgageholders lately? Only flippers.

Folks owing more on the mortgage than the house is worth is pretty much true for the first ten or 15 years of a thirty-year mortgage. Securitization of mortgages must not have been regarded as a problem, either, since it was such a widely used practice. What popped the bubble was six months of $4/g gasoline. Homeowners - especially homeowners in tracts built away from sources of transportation - needed 2 or 3 vehicles to make their lifestyles work. Six months of 4$/g gas forced folks to choose between commuting to work or paying the mortgage. By towing the line on NOT using the strategic oil reserves to bring gas back below $3/g, George Bush turned up the heat on what had been a simmering issue and wrecked the economy. This should serve to warn us NOT to elect rich boy politicians who are out of touch with the way the world works.

Yes, you reap what you sow - but we need to be very clear and who did what.

Jan. 31 2012 10:58 AM
Henry from Brooklyn

I find it hard to believe that this whole effort is no more than a political witch hunt particularly when the Attorney General characterizes any culpability of Fannie/Freddie as a "right wing myth". They funded billions of sub-prime, enjoyed favorable accounting treatment, got away with minimal capital requirements and had enough money to burn to hire the likes of that famous historian, Newt G!

His listing of sub-prime product - no interest loans, negative amortization loans etc - were legal products that Fannie/Freddie were only too happy to fund through their securitzation programs. When the government money spigot is on full blast, the bankers are only going to accommodate the insatiable demand. Why are we surprised?

Yes many people were ripped-off. But even the president noted that many bought homes they couldn't afford (often to buy big screen TV's and the like) and are therefore culpable.

This witch hunt will only line the politicians pocket with populist support. Bankers will now perceive that if they get a semi-colon wrong in the paperwork (paperwork to finance a home now exceeds 200+ pages) they'll end up in a perp walk. So the housing sector will languish while the AG is a hero.

Come on. Please do something that will help.

Jan. 31 2012 10:57 AM
Jack from Sunnyside

Doesn't this initiative by the president and his administration suffer from the same problems as many of the president's programs: that he lacks or can't bring to bear the political skill to effectively enforce such effors?

Jan. 31 2012 10:44 AM
RL

MichaelB, if you were correct then states with death sentences would no longer have murderers. Punishment of one does not stop crime by another. It just doesn't.

Jan. 31 2012 10:43 AM
jgarbuz from Queens

The solution is SHARIA LAW. Chop off their hands and heads! Off with their heads! No usury! Live in simple tents, under the desert sky and give thanks! Who needs houses anyway?

Jan. 31 2012 10:43 AM
Karen from NYC

One aspect of these crimes is that prosecuting them and making changes has taken so long! All the purposeful foot dragging has cost people so much more and driven them under even more. I heard people had to wait for very long periods before being able to apply to have their mortgages changed.

Jan. 31 2012 10:40 AM
RL

Gary, you're not even close to being on topic. can't you get beyond base partisianship for a second?

Jan. 31 2012 10:40 AM
MichaelB from Morningside Heights

Those saying we should forget about investigating and prosecuting and only try to prevent it from happening again... do you think that with the huge financial incentives to be gained by gaming the system that any regulation will prevent it again? Only when there are severe consequences that people have to consider will it prevent some from doing it.

You need both! Laws AND consequences (and the examples you set by consequences) else, what good will the laws -- millions of words written on paper -- do?

Jan. 31 2012 10:38 AM
The Truth from Bush

include Bush and Cheney in the investigation and prosecution as well.

Jan. 31 2012 10:37 AM
jgarbuz from Queens

The solid adage of King Solomon, "Neither a borrower nor lender be" was forgotten or ignored. Credit became loose and easy, and many felt that it was a good thing, until the whole rotten structure built on bad debt collapse. Just a house of cards. Nothing can be done, but to move on until the lesson is forgotten again just in time for the next bubble.

Jan. 31 2012 10:36 AM
MichaelB from Morningside Heights

Please remind us of the title of Ms. Morgenson's new book on this subject. I heard AG it mentioned in the previous segment, but it slipped my mind...

Jan. 31 2012 10:34 AM
gary from queens

Obama: "everyone must play by the same rules"

You mean like when republicans proposed an amendment to obamacare that would have forced Congressmembers and Senators to accept the same EXACT healthcare provisions under that law as ordinary american citizens, and Obama and his minions killed that amendment?

That kind of playing by the rules?!!

Jan. 31 2012 10:34 AM
anon

New article up says that the Financial Crisis Inquiry Commission referred criminal charges to the DOJ a year ago, and nothing happened:

http://news.firedoglake.com/2012/01/30/fcic-referred-criminal-securities-fraud-violations-to-justice-deparment-a-year-ago/

Jan. 31 2012 10:33 AM
RL

If all this becomes an argument about how long it took to invesigate these crimes, then we're missing the point and allowing others to distract us from the real issue. The point is to stop if from happening again, and the only way to do that is to confirm what went wrong. Then change the rules... or basically, reinstate them better. De-regulare, kill Glass-Stegal, and 3 years later it all blows up. How much more cause and effect do you need? How long it took is just blowing smoke. It's here now.

Jan. 31 2012 10:33 AM
Martin Chuzzlewit from Manhattan

Let's put Barney Frank at the top of that list and make him do a perp walk.
He should be on trial, not retiring.

In addition, this guy lied about Fannie and Freddie while his then boyfriend (now husband) was a senior official there!!!

Jan. 31 2012 10:33 AM
Steve from Branchville, NJ

Will people such as the executives at Goldman Sachs who called CDOs and other mortgage-backed securities dogs and shorted them, and then pumped and dumped them to investors, be investigated as well?

Jan. 31 2012 10:33 AM
The Truth from Becky

Too little, too late, move on to prevention.

Jan. 31 2012 10:31 AM
simpsonsmovieblew

Yawn, Shneiderman is another politicized screwball. Just like Bush in 2000/2001: "Just a few rotten apples."

Jan. 31 2012 10:31 AM
Steve from Rockville Centre, NY

Forget about investigating what was done. Stop it from happening again. Bring back Glass-Steagall. Enact laws which will prevent it from happening again.

Jan. 31 2012 10:14 AM

Leave a Comment

Email addresses are required but never displayed.

Get the WNYC Morning Brief in your inbox.
We'll send you our top 5 stories every day, plus breaking news and weather.