The commission appointed by the President to investigate mortgage fraud brought its first civil fraud case against one of the banks 'too big to fail'. When the Obamarama was asked why banksters have not been prosecuted for the the rampant greed that nearly sank the US economy his reply was a rather tepid remark that a lot of what they did was not illegal. Apparently New York Attorney General Rick Schneiderman disagrees with the President's estimation of bankster activity. Schneiderman charged JP Morgan-Chase with widespread fraud in the sale of mortgage-backed securities for the actions of Bear-Stearns investment bank which JP Morgan bought in a government brokered deal just before the Panic of 2008. According to the indictment Bear Stearns bankers knowingly sold defective loans and mortgage securities while concealing from their customers the true nature of the securities they sold. Inside the banks these investments were widely considered to be "crap".
The US Attorney in Manhattan has also filed suits alleging fraud by big banks arising from the Panic of 2008. Wells Fargo is alleged in a suit against it to have certified risky mortgages insured by the Federal Housing Administration for more than a decade, costing the government hundred of millions in insurance payouts. Wells Fargo allegedly failed to properly underwrite more than 100,000 loans it certified to be eligible for FHA insurance. This case is the fifth brought by the US Attorney's office against a major lender. Three cases have been settled this year: CitiMortgage Inc. for $158.3 million; Flagstar Bank FSB for $132.8 million and Deutsche BAnk for $202.3 million. What is missing in all this legal activity are criminal prosecutions for what is now apparent: criminal fraud on a wide scale among banksters only interested in generating more profit from the low-interest real estate boom that ended in 2007. The FBI predicted in September of 2004 that the developing epidemic of mortgage fraud would cause a financial crisis if not stopped. The Federal Housing Finance Administration has filed fraud complaints against seventeen financial entities some of which are the largest financial institutions in the world.
But the current de facto amnesty for bankers implicated by fraudulent transactions leading up to the crisis that crashed the US economy is in stark contrast to the over 10,000 criminal referrals and over 1,000 felony cases brought during the S&L Crisis of 1988-1994. If anything the current crisis, for it has not yet played out in full, is much larger in terms of money than the S&L imbroglio. 348 banks during the period 2008 through March 2011 failed, taking with them $80.1 billion in federal deposit insurance. Attorney General Holder vowed at one point, "We will investigate you [unscrupulous executives], we will prosecute you, and we will incarcerate you". Lots of tough talk, but too few banksters walking the walk.