Slashdot Mirror
Email Trails Show Bankers Behaving Badly
An anonymous reader writes "The New York Times is running a pair of stories about U.S. financial institutions being investigated by the Federal government and courts for alleged systemic and illegal activities that helped bring about the housing crisis and collapse of the world economy in 2008. Emails produced during courtroom discovery reveal that insiders at JP Morgan Chase knew that the bundles of securities they were marketing to investors were rotten with bad loans. And emails show the credit rating agency Standard & Poor's (a division of McGraw-Hill) was determined to stop losing deals to its competitors by being too tough on the banks whose products they were evaluating."
Corruption is corruption.
Hang them from the trees on Wall Street as a warning to others.
And stop creating government regulations that give them lots of loopholes to exploit.
Futurist Traditionalism
It mentions email, and email is very techy. You need computers and stuff.
rewriting history since 2109
Now we can see who sits in the cockpit of the "invisible hand". When the people at the top of our complex financial system, with the trust and responsibility placed on them to safeguard the well-being of the whole community, behave in such an anti-social manner they belong behind bars. Overt anti-social behaviour is to be punished, that's the whole point of laws. That these people will get of scot-free or with only small (for them) fines is fresh evidence that the structure of our society needs mending. News at 11'!
This reminds me of the "Barry Bonds took steroids, reports everyone who ever watched baseball" story from The Onion. I'm shocked, simply shocked at how unsuprised I am.
And I wouldn't blame a few individual bankers, I think this was coordinated a bit higher up. American banks had been selling way too many loans, and when they saw this was becoming a huge problem that might bring down the entire American economy, they made the brilliant move of packaging these loans in nice AAA investment vehicles and selling them to the rest of the world. Now it became a global crisis instead of an American one.
Not a very moral or honest thing to do, but it sure was ingenious.
It's better than a post by that Bennett blowhard or the blatant Dice ad in the Red Hat post.
What's wrong about it? As far as I'm concerned, that is pretty (disgustingly) accurate...
It turned out that e-mails are used as evidence. One could say that's computer technology related... It's not like those were written notes or something.
in order to increase their profits.
More news at 11
good luck with that. Maybe if they didn't have all those armies of well trained soldiers with machine guns...
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
As someone who has been through an E-Discovery process (lawsuit by a patent troll we were fighting) there is amazing forensic analysis technology that goes into collecting and collating emails, IM's, and documents.
Suppose you were an idiot and suppose you were a member of Congress
Any executive that was involved. Jail them, raid their homes, freeze their assets. Don't tell me you need a warrant.
Then shove a plea bargain up some asses so we can see a crybaby banker kill himself.
Confirmed. Remember, this was back in the days before iPads and such.
Look, anybody who wants to see anything different has got to tell me how we de-centralize.
I'd be for creating banks in the other 49 states (beside North Dakota), and returning all of the 10th Amendment violations like Sallie May, Freddie Mac, and the education loans to the states where the people/places in question reside.
The federal government could then assume a more legitimate oversight role.
Are you going to alter the net corruption of the overall system? Unlikely. Can you ACTUALLY DO SOMETHING OTHER THAN THROW WORDS AT 'TOO BIG TO FAIL'? I daresay you can.
But your Ruling Class Overlords will not be separated from power by less than a crowbar, and maybe a little heavy PETN.
Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
Obviously you don't appreciate how many nerdy quants there were on Wall Street painting over these bag-of-shit securities packages with a fresh coating of technical bullshit to make them look like roses.
What political party do you join when you don't like Bible-thumpers *or* hippies?
Why only decimate them?
Are you sure you want to kill only 1 in 10?
You have 5 Moderator Points!
Which Helpless Linux zealot/MS basher do you want to mod down today?
and do hard time, nothing will change.
Unfortunately, Obama has proved a friend to the wealthy and powerful, so don't hold your breath.
Standard and Poor may not have acted quickly on downgrading these bad loans (they ALL were reluctant to downgrade them, S&P were losing business because they weren't keen to give them good ratings!). The reason S & P are currently under attack is simple:
They downgraded the dollar because Congress wouldn't tackle the government debt. As soon as they did that, the Fed started threatening them with prosecution over bad ratings.
The current deal with the Republicans in Congress includes a raising of the debt ceiling, and is really a half deal. S&P might have downgraded the dollar again over this botch half deal. That's a problem, it would drive down the dollar and force more money printing.
So suddenly all the talk is about prosecuting S&P and ONLY Standard and Poor, not the other ratings agencies. It's a shot across their bows, a warning to them to let this debt ceiling slide.
But S&P need to *recover* their rating confidence, and that means making some tough ratings that are extremely unpopular. The deficit hasn't been tackled, the debt ceiling raised yet again, they have to lower the rating on the dollar and to hell with the Fed and it's threats.
Given that the dumb fuckers who get caught passing a few thousand in bad checks tend to do more time than the smart fuckers who get caught passing a few billion in bad securities tend to do more time, I'd say that the quants are on to something...
(Can you imagine what would happen to sentencing guidelines if we decided 'fuck this shit' and started punishing large scale fraud with the same sorts of time-per-thousand-dollars-stolen that we do for blue-collar economic crimes?)
I'm with you here, but the lack of shock, surprise, and outrage is a terrible indication that we've become so comfortable with the misdeeds of our political and financial leaders that we expect no better from them. They egregiously abuse their positions for monetary gain, quite often with consequences no more severe than the obligatory 50 lashes with a wet noodle, when a federal sentence with a side of prison rape seem much more appropriate.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
Look, at the height of madness, these derivatives which no one could possibly understand, derivatives so complex even God Almighty could not understand were given the same rating as US Treasury bonds or just a microscopically lower ratings. If these banks really believed the ratings by S&P they would have bought them at the same yields as US Treasury bonds, (or microscopically higher yeilds). But these derivatives were yielding a full percent, and then they were shooting up.
Why? These bastards knew, no matter, what lipstick S&P and Moody's slap on these beasts they are pigs. If small investors were taken in, that lone retiree conserving his/her nest egg, despairing at the ridiculously low interest rates they were getting, buying one lone bond for 12000$ and losing it all, they have my full sympathies, and wish they would be able to take on these bastards and send them to jai.
But, the buyers were the big guys. Why are they buying bonds, whose rating was paid for by the sellers?. Why can't they come up with a plan to pay for the ratings themselves? The bankers could have decided the buyers of bonds would chip in a few dollars and create an agency that will never be paid by the sellers of bonds and would be totally funded y the buyers of the bonds. They still have not done it.
What is playing out in the courts is something like a lovers spat or falling out between the thieves.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
I think you Americans need a full reboot of your system over there. You have a federal government that is unable to get bills or budgets passed, a federal administration that is unable to oversee banks and business sufficiently and thousands of companies exploiting every loophole that your broken government leaves. Add a judicial system extremely susceptible to frivolous litigation to that. You may blame a few bankers or a few companies, but the problem is deeper than that and possibly has to do with your constitution.
Interesting comment, I'm no expert but it does sound realistic ;-)
I worked in the research department of a major brokerage firm during this time, and the firm paid truckloads of money to research firms and information providers in the quest for detailed, in depth, up-to-date, and most importantly unbiased information. The consequences of encouraging the same providers to sour the milk should have been obvious.
Someone who sells ratings should not also be buying and selling these products. Of course there is a huge perverse incentive here.
As someone who has been through an E-Discovery process (lawsuit by a patent troll we were fighting) there is amazing forensic analysis technology that goes into collecting and collating emails, IM's, and documents.
Unless there's a crime involved. Then the FBI just comes in and starts ripping hard drives out of chassis with an "amazing forensic" tool, also known as a hammer.
Never underestimate the computing ignorance of our grade-F government.
Decimate is an English word, not a Latin word. It means "to reduce drastically especially in number", that it was derived from a Roman practice and a Latin word doesn't change the commonly used definition that is hundreds of years old.
Do you also think that a symposium can only mean a drinking party?
Oh, those poor goats...
Those "bag-of-shit" securities were, in very large part, guaranteed by the US Gov't. That Wall Street Banks offered crap investment opportunities that no one understood is nearly as bad as the so-called investors who bought them with an equal lack of understanding, and don't get me started on people who "bought" homes they could never, ever make the payments on that formed the basis for the "bag-of-shit" investments no one understood.
That they were "highly-rated" by the security analyst firms means very little - I'll leave you with this sage advice from that classic film "Tommy Boy"
Ken
This oldie but goodie is funnier.
"I'm shocked, shocked to find that gambling is going on in here!"
It seems from what I've read all the rating firms were complicit in this.
It's ironic that the main reason they seem to be charging S&P is that they were the most reluctant to be evil, and the last arrival to being part of the problem.
From what I read, S&P wanted to be tough - wanted to be right. They were honest when Moody's and Fitch were starting to cook the books. They were the good guys (or, at least, the least bad guys) in the whole mess.
Then their clients said "we like favorable ratings more than we like integrity" and voted with their feet. S&P had a a choice - bend our principles because "everyone else is doing it" or stick to their principles and possibly go out of business. They reluctantly chose B.
And while this was a bad choice, it reads like they were the only party to this mess who gave a damn, who wanted to do things right. They were the only ones with a crisis of conscience. But because they had the crisis of conscience, and its recorded, THEY get to be the whipping boy. Not Fitch. not Moody's. Not the ones who never cared, who were corrupt from day one. The leaders are off the hook, and the reluctant follower gets hammered. It's not that they're innocent, but on the scale of guilt, they're lower down than many.
Justice department indeed.
Let's remember, these "smoking gun" emails are the result of exhaustive, comprehensive searches of EVERY ingoing and outgoing email from the respective organizations. In a large enough company I can guarantee you I can find emails that "prove" almost anything relating to thier business, their customers, etc.
That some employees expressed doubts or questioned the value of the products or services their company offers means very little if they are not the decision-makers.
Anyone surprised that a salesman at an investment house might be selling something they either don't understand or personally see the value in shouldn't be investing in the stock market. Would you be surprised to find out the guy selling you a Chevy Volt doesn't believe it is the best car in the world? What a salesman says to a customer is not neccessarily what he believes in his heart or in his mind.
Ken
How did it have the opposite effect? You responded. That was the effect they wanted.
S&P downgrades the dollar Aug 5th 2011, the only ones to do so, the other ratings agencies didn't:
http://www.reuters.com/article/2011/08/06/us-usa-debt-downgrade-view-idUSTRE77504J20110806
S&P to be sued over mortgage securities ratings:
http://www.cnbc.com/id/100432491/US_to_File_Civil_Charges_Against_SampP_Over_Ratings
I'm not the only person to notice that S&P is being singled out:
http://seekingalpha.com/article/1155991-why-is-government-suing-s-p-the-only-ratings-agency-to-downgrade-u-s-debt?source=google_news
Jason Hamlin points something out that is crystal clear:
"Standard & Poor's was the only major ratings agency to downgrade U.S. debt. On August 6th, 2011, S&P deprived the U.S. for the first time of the triple-A rating it had held for over 70 years. Their justification was that the budget deal brokered in Washington didn't do enough to bring American's fiscal house in order. And they were right!"
AND THEY WERE RIGHT, this is the key point S&P downgraded the US dollar and they've been proved right, as they headed to the next fiscal cliff, and should downgrade it again.
"You see, if the rest of the world stop buying into the U.S. government/Federal Reserve Ponzi scheme of a monetary system, the party too must stop. The Fed is already thought to be purchasing up to 70% of U.S. bonds at auction, "monetizing" the soon-to-be worthless paper for which Asian nations have lost an appetite."
When the Fed buys bonds, it's actually printing money, and using that new money to swap for government debt. It creates an inflation that can appear to a casual observer to be similar to the inflation caused by growth. Just as long as nobody makes too much noise.
"How DARE you do that S&P?!?"
"So now, after a joke of a resolution to the fiscal cliff, promising to cut $1 trillion over 10 years, when we need to cut $1 trillion this year, and using the political process to allow Congress to increase the limit on its already maxed out credit card, agencies are once again threatening to downgrade U.S. debt."
"Of course S&P should be downgrading U.S. debt! Has anyone looked at the books lately? Any individual or business that spends this much more than they take it would have been bankrupt and on the street years ago. Yet, when Moody's threatened to join S&P in downgrading U.S. credit last year, they were immediately attacked..."
Moody's chickened out and let them keep the AAA rating BTW.
So now we have a lot of sabre rattling, just after the fiscal cliff botch, all directed at S&P, because the other rating agencies are too scared to downgrade. Yet S&P were proved right the last time, and this deal fixes nothing, so they'll be proved right again.
But we get the point.
It's very well established that banks committed fraud. It's very well established that the US Government protected these very institutions when they were knowledgeable of the fraud being committed.
It's also very well established that no one's going to criminal court. Wall Street and Washington D.C. have been coupled together in such an orgy of conspiracy that neither will willingly do anything to jeopardize their sybiotic relationship.
It's a long time ago that I heard from "Feathers" McGraw. (For those who don't know: https://wallaceandgromit.wikia.com/wiki/Feathers_McGraw )
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
CRA was first. The wonderful Carter presidency put upon the country the Community Reinvestment Act in order to give people mortgages who didn't have the incomes and assets to justify giving them a loan. Private businesses are very well able to judge who can pay them back their money they loan and have been making those decisions since our country was founded.
But the CRA caused banks to say "We will lose money doing this." Hence, all of the powers inside the WDC beltway said, "We will let Freddie & Fanny buy your banks loans." At that point the risk had been transferred to those quasi public groups. But then F& F said "We can't hold onto all of this risky paper." Only then did the powers that be, inside the WDC beltway, allow the creation of these mortgage pools.
The powers that be included the SEC, Treasury Dept., GAO, FAB, etc. This was a train running downhill out of control since day one. Every person who tried to stop it was shoved off the train.
One political party that wanted to curry the vote from the population least able to afford a loan was behind this and stopped all efforts to cut the program (& Barney Frank knows this is true as he stopped many efforts).
http://careereq.com/articles/emotional-intelligence/workplace-psychopaths-how-to-deal-with-them/
http://www.youmeworks.com/sociopaths.html
http://www.uncommon-knowledge.co.uk/articles/strings-psychopathy.html
http://www.lovefraud.com/blog/2012/02/10/the-gray-rock-method-of-dealing-with-psychopaths/
http://www.lovefraud.com/blog/2008/01/11/ask-dr-leedom-are-there-psychological-tactics-for-dealing-with-a-psychopath/
http://mytherapy.com/discussion/default.asp?group=14
http://psychopathtracker.com/WhatYouCanDo.cfm
As someone who has been through an E-Discovery process (lawsuit by a patent troll we were fighting) there is amazing forensic analysis technology that goes into collecting and collating emails, IM's, and documents.
So, you've discovered how to use grep?
Now if only that were part of the story, then it'd be suitable for placement here (though it could be in TFA, which of course I haven't read, in which case the summary is off-topic).
This story is just for invoking the rage of Slashdotters, as so many stories of late (by which I mean the past few years, at least) are. Nerds are, on the whole, highly-intelligent idealists. We love to tell others how things should be done, especially when they're outside the field of technology, so we don't have to worry about other perspectives. Add to that the hatred of the rich and distrust of banks, with a bit of conspiracy theory for flavor, and you have a perfect recipe for a sensational Slashdot story.
Nobody's surprised that bankers screwed up. They took their bad securities, mixed them together with securities that other banks said were good, then sold the whole thing saying it's good... only for others to mix in their own bad securities and reiterate. Some noticed, some didn't, and some noticed but didn't want to do anything about it. That sucks.
Meanwhile, IT admins around the world are requiring weak passwords, moving vital data to cloud services without backups, and putting servers under water lines. We all do things to make the world worse, but for now it's just the bankers who are presented as evil for it.
You do not have a moral or legal right to do absolutely anything you want.
The thing is, if we allowed the free market to work, then AIG, JP Morgan, Morgan Stanley, and all the big banks who participated in this would have evaporated overnight and regional banks who acted responsibly would have stepped in to fill the void. But the free market was not allowed to do its thing and we have a doubling down on crony capitalism that will fail again, bigger.
A lot of people like to pretend there's an all-powerful government out there that can suppress any dissent, but we've all seen the last 5 years just how little the people need to do for that illusion to vanish. Just look at how incompetent the government was at handling Hurricane Katrina, which was predicted well in advance and which they knew about for days before. Imagine if something unforeseen were to occur.
And at this point that's what's required to correct this situation.
If not us, who? If not now, when?
Ok, sorry for trolling here. But our economy is fuct. There can be no other people to blame, except those that are in charge of running the system.
This is no different than that old man that shot the bus driver in Alabama recently, took a boy to the underground bunker and held him for days. We all know it was that guy that did it. They talked to him while he was in the bunker. They talked to him about everything they could. Eventually they got the boy and the man is dead. Now what if years later, we hear a report that they found emails that he sent to friends that can be used as evidence in court for a conviction. Who the fuck cares, we all know he did it.
Same thing here. This is silly.
just my .02
I'm not sure if you're mentally deficient, or just evil. But the world is now stupider for having your words in it. Bravo, Orc... bravo.
The US still hasn't had it's revolution (since it's establishment after the seccesion from the British), I guess it's really about time!
...and decimate in english slang also beams "to completley destroy"..
Why do douche bag proof readers / failed english teachers always end up on here?
Someone who sells ratings should not also be buying and selling these products. Of course there is a huge perverse incentive here.
Here is a list of all the ratings agencies. You'll notice that no investment banks are on the list.
As someone who has been through an E-Discovery process (lawsuit by a patent troll we were fighting) there is amazing forensic analysis technology that goes into collecting and collating emails, IM's, and documents.
Unless there's a crime involved. Then the FBI just comes in and starts ripping hard drives out of chassis with an "amazing forensic" tool, also known as a hammer.
Never underestimate the computing ignorance of our grade-F government.
They don't use a hammer, that could damage the drives. If the drives in are in servers, you can just pull them out.
Anyways, they don't carry a hammer, it gets in the way of them carrying some sort of automatic weapons you see in the photos and videos. Because you know, them HD's are dangerous, they spin fast.
Be seeing you...
Look, if I lend a thousand dollars to a homeless guy on the street corner, and he never pays me back, whose fault is it really? I mean, I can start jumping up and down and getting mad about it, but when it comes down to it it's the lender's responsibility to evaluate the debtor's ability to repay.
Or, I guess, you could lend money to people who you know full well can never repay it, and then sell off the debt to somebody else after obfuscating it as "AAA-rated investment grade CDO tranches"; that sounds really sustainable, too.
The sad truth is people are corrupt. We all are. It's a part of human nature. What we need to start doing is accepting that people in power are going to abuse it, and put in blocks, checks to keep that from happening. The truth is, people need to be regulated. They need to be checked that they are doing what they are supposed to.
Too big to fail? Not to big to jail.
This also shows what the government thinks of everyone but the rich and corporations. They will bend over backwards to bail out the rich and the corporations while fucking the rest of us in the ass. The economy has been in the shitter but the people the caused it live like kings.
Wish some good would come of this, but our government won't do anything about it.
Be seeing you...
You only decimate because then the 9/10 left can still do work. Presumably better work.
So, when the usual "blame the last Democrat in office for the Republican party's problems" didn't stick to Bill Clinton, you decided to go back to Jimmy Carter? Seriously? You're saying that the 2008 financial crisis all comes down to a piece of Carter-era legislation?
I think Bo's post made sense. Maybe where it rankles a few chains is the fact that he blames Carter. If your hero is a politician I imagine you get offended a lot.
As someone who has had the FBI in for an investigation, what you are saying is not entirely true. They came in, did images of drives on the servers, confiscated only a handful of laptops, and carefully inventoried everything. They were pleasant to deal with, and left our infrastructure intact. Our issue was with an employee engaging in poor beahvior, and we chose to be cooperative. Perhaps that is the difference...how you treat them.
Part of the point of decimation was that the 9 would have to kill the 1 themselves, and it would be someone they knew well. Bankers, lacking the inherent empathy and kindness of the deadly roman legions would remain entirely unaffected by the experience.
Investment banks don't rate their own products.
They pay ratings companies to rate them.
Do you see the difference?
If you do please let me know what it is.
when politicians are responsible for their acts WITH HIS OWN present and future monies. No super retirements or bonuses for ANYBODY among the "decision makers" if the debt goes up. But, hey...dreaming is still free and not taxed.
are you high? he says it like it is.
Govt has the power to corrupt incentive structure in a way that spits in the face of common economic sense like no other entity, govt has the power to provide players with leverage by pushing interest rates down which amplifies the magnitude of malinvestments, govt has the power to force people to invest in 'safe papers' (retirement funds mandated to sit on AAA papers), govt has the power to decide who defines what AAA is in the first place, and govt can provide market with a seemingly bottomless sink for toxic sludge (F&F).
No amount of afterthought regulation will save you if the incentive structure is broken by govt edict. Exploiting it is *rational*: produce as much sludge as you can, resell it right off the bat to rake in govt guaranteed money or your competitor will and you will go out of business.
Come up with regulation that is aligned with reality then we'll talk. If you pile up untold riches in one place to lure the greedy and put a sign 'don't touch it or else' you really think nobody will bother? If the risk/reward ratio is fat enough, plenty of people will and that's exactly what happened.
Carter at least had the welfare of the American people at heart and to this day is active in Habitat For Humanity.
However if you wag a sub prime deal in front of someone working at MacDonald's or Wallmart they will jump at the chance to not have to support landlords. The real American dream.
Face it what really happened was a group of shrewd and corrupt largely republican leaning individuals perverted the CRA and extorted the people of United States in a faceless mortgage securities scam that many understood was certain folly.
I remember many boasting about how great selling useless paper was and who cares as long as they got their commissions.
I WATCHED the young guns snorting lines of coke bragging about how great the paper business is!
The truth is that Wall Street and the mortgage security business become little more than a cleverly disguised den of thieves which reached a frenzy during the Bush the Second era. Sure it started in the Clinton era. BUT the sub prime crap is a direct result of the BUSH 2 era financial deregulation policy blitz to finance wars without printing money or applying war time austerity measures like rationing and mandatory military and public service at low wages.
We are paying for the corrupt war in Iraq right now and the oil and service revenues created from it for corporations like tricky Dick's Haliburton are not sufficient to offset the cost by any means.
Milo Minderbinder Incorporated did not succeed in stimulating the economy enough this time with all the service contracts it received during the war. That is why he didn't go after the real target in Afghanistan with gusto the way he did Iraq. There was less money to be made in the war in Afghanistan and a much higher financial risk for Chaney and Co.
The ramifications of what really happened in 2008 are still not fully understood by the general populace. And there is no easy way out, peace is a bitch, it just doesn't make money sometimes unless you have a goal to achieve, something like going to the moon.
Needless to say during the 1960s the growth in the US was at its height because the war in Vietnam was paying dividends because it was a low risk operation that employed millions and at the same time Nasa was employing huge numbers and creating technology at a fantastic rate.
Assholes in offices selling sub prime mortgages bundled as securities in offices to other assholes siting in offices is not a real economy!
As far as I could tell (as an about to graduate or just graduated CS major) the economy crashed somewhere around 2000/2001 and never really did recover. It's only been downhill since. That's what I remember hearing in the media at the time too. The economy was crashing. It was only after the housing market did it's thing that suddenly history was rewritten and the crash didn't happen until later. I guess the world just cares more about realestate agents than geeks.
Egan-Jones, a small competitor to the big three, recently got hit with a 18month ban on govt ratings.
Nice canned response. I'm not saying government doesn't play a role in all of his. Hell, for starters, the FEC being completely captured is exhibit A.
What I *am* saying is, if you think the main cause (or the distant cause) of all this is the CRA, Carter, Fanny and Freddy, then you are retarded. A retarded Orc. Who should stop watching FOX and trolling Breitbart. That is all.
Poppycock. The reason the system blew up is that private lenders were selling MBS securities via unregulated private conduits. Because of this GSE's lost the ability to monitor and control mortgage originators. This contributed to a decline in underwriting standards and was a major cause of the financial crisis.
The default rate of these mortgages is FAR greater than anything F&F participated in.
Even in the *best* case, if true - it indicates a *HUGE* issue.
The FBI should be professional no matter if you cooperate or not. Sure, they *can* be a dick if they want, but it's bad all the way around if they are.
It is, essentially, a violation of the constitutional rights of the accused - in that they are treated differently under the law. [Some nicely, some not.] Proving it in court is a far more difficult matter, however.
That law enforcement doesn't see it as a problem, indicates a serious flaw in their understanding of their responsibilities and have thrown away their honor.
It is, IMO, because of this kind of mind-set that the public starts to lose their respect for law-enforcement and see them as opportunistic thugs. Then the system breaks down - people feel they'll just do whatever they can, if they can get away with it. When people start shooting cops, they don't care much because the cops only care for their "friends" ... and since the cops aren't their friends, whatever bad things happen are just too bad - they're getting back what they did to the public.
It's not right for the public to feel that way - any more than the cops are right to do what they do - but it certainly makes the breakdown of respect more understandable.
So, being thugs and treating some defendants nicely and others like crap really, ultimately costs law enforcement a lot. It also costs society a lot too.
But I really, really hate "explanations" like the parent, because they seem to justify that kind of behavior. IMO, if you can't treat all your "customers" with respect you need to find another job. That doesn't mean you have to love them all - that's pretty hard - but you can at least do your job well and with respect for those you work around/ or with, and interact with.
It's better to leave them alive after stripping them of their money.
This ^^ +1000
And tell me, who is likely to *know* who is able to afford the loan better?
A) The bank who has collective experience in the thousands of man-years in making loans and seeing the trends of who pays and who doesn't and what kind of debt load is reasonable. An institution who has NO OTHER job than to manage money, cash-flow and manage risk from loans and investment?
or
B) Sammy Homeowner who simply wants a house. He's not very sophisticated - he couldn't even calculate how his loan should work out in interest and principle. He works hard, but also wants all the good stuff, and his loan officer is telling him - "This is a great deal! You'll love it. It will be great. Here, just sign right here."
If you pick B, can I have what you're smoking - it's really incredible stuff.
The banks knew who was likely to not repay - they are vastly more sophisticated than virtually *ANY* home-owner getting a loan.
I'd agree the person taking the loan should have used more diligence - but the disparity is staggering. Blame ought to be apportioned 10:1 to the Bank.
Can you imagine what would happen to sentencing guidelines if we decided 'fuck this shit' and started punishing large scale fraud with the same sorts of time-per-thousand-dollars-stolen that we do for blue-collar economic crimes?
I'd imagine that they'd come up with a less-than-ten-word mantra to make it sound like a very bad idea to enough people. Actually, it seems like two word catchphrases are bigger these days. Death panels, job creators...
There are also probably real reasons why that would be a bad idea, ones that would not be brought up in the campaign to defeat such a bill. Such as "some scapegoat would always take the fall rather than the real criminals, as already happens, because our justice system sucks compared to what we think it should be, especially when it comes to rich people."
So I don't think that magic bullet would ever come to pass, nor do I think it would be a magic bullet.
That is just the same as them doing it.
I mean why are the ratings not sold as a separate product paid for by the buyer?
A recent study by the preestigous National Bureau of Economic Research found the Community Reinvestment Act was the initial cause for banks to lose their bearings. They were intimidated intimidated into making bad loans on one hand and relaxed into doing so by gov promises to back up losses. The private/public partnership removed barriers to sound financial practice.
"NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas.
To satisfy CRA examiners, "flexible" lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found.
The strongest link between CRA lending and defaults took place in the runup to the crisis — 2004 to 2006 — when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.
CRA regulations are at the core of Fannie's and Freddie's so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.
It passed a law requiring the government-backed agencies to "assist insured depository institutions to meet their obligations under the (CRA)." The goal was to help banks meet lending quotas by buying their CRA loans.
But they had to loosen underwriting standards to do it. And that's what they did...
"We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities."
Its pretty funny to see Federal Housing Finance Agency suing banks like Chase (who was actually one of the banks least caught up in the sub-prime fiasco)
New Study Finds CRA 'Clearly' Did Lead To Risky Lending"
http://news.investors.com/ibd-editorials-perspective/122012-637924-faults-community-reinvestment-act-cra-mortgage-defaults.htm#ixzz2KKE5CMwm
Oy, this canard again?
Sorry, no: http://www.ritholtz.com/blog/2009/06/cra-thought-experiment/
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
We know they are crooks, and now with some nice hard evidence I want them to lose everything they care about and burn to the fucking ground. Dirty evil fucking assholes.
And Egan Jones, downgraded the dollar to AA-, so no surprises there, although they're not the big 3 and it's not a big deal for the feds to simply ban them from issuing dollar ratings.
http://www.zerohedge.com/news/egan-jones-downgrades-us-aa-aa
Seriously, does anyone think the US government deficit problem has been solved? Then why are the ratings for the big agencies AAA?!
If you're saying giving a bad rating can get you sued, then why are the other agencies, who were clearly wrong over the S&P downgrade, not prosecuted???
Bernie Madoff is the exception that proves the rule. Had Madoff been working instead for Goldman Sachs, at worst he is at home "blackballed" by the SEC collecting unemployment.
How this piece relates to a news-for-nerds site? Is there any new technology involved in the making of it? This has no place in the front page of /.
For all of these sociopathically greedy executives who don't get the concept that their actions hurt millions of others, it's time to gently hammer that concept into their skulls with a 2x4. Take #everything# from them. Legally ban them from ever being on an executive board or owning a company again. Would you let a convicted pedophile work at an elementary school? Create a system where every bank account they sign up for from then on in is monitored, just like pedophiles' addresses are monitored. Leave these people naked at the curb and screwed for life. Put all the money towards research into better nerf weapons?
exactly. The banks were paying loan officers commissions on loans, so the incentive went to more loans, for more money, as fast as possible. I was there, I bought a house while the bubble was building, and was shocked at the tactics that were being used. I am very thankful that I had a long term plan that I was following, so I could just use their aggressiveness to my advantage. The loan that we used to buy would have turned us inside out if we had followed the strategy that was given to us to convince us to take the model of loan that we had. I have a feeling that most people would have believed the banker who handles money and loans all day every day, and anyone who trusted them would have been forced into a position to sell or be foreclosed on, and since we know now that there were so many people in that spot that all the homes were underwater... When countrywide went under I just laughed
which is trumped by companies having a retention policy of 90 days - so if ediscovery doesn't start early enough, there's no evidence.
Honestly, How are you not tired of blaming the bankers on this one. They did their job. The US Govt set up sub-prime mortgages and then it became a game of "offer sub prime loans or go out of business". So they offered less then logical mortgages to people who could never afford them. How does the bank make money off this? They essentially sell it, the insurance on it, and everything to do with it. So i guess the banks should have just went out of business because of Govt intervention? Stomached the bad loans? Or just hold onto them and do the same exact thing that happened but on a per bank basis. It was a bubble and it was going to burst with or without the trades involved. The rates fell through the floor because of the massive increase in mortgages. I assume a good amount of you locked in at a lower rate, you have only those Evil Bankers who were doing their job to thank. It is a little disheartening that the Govt caused this and then only bailed out the Corporations who made tons of money off it. Is it Clintons fault for creating sub prime mortgages? Maybe. Was it George W for extending them through out his term? Probably just as much as Clinton is to blame.
Canada had no "ZERO DOWN" loans and consequently no bank failures in the mortgage meltdown.
Smoke that in your pipes, all you smart WDC politicians. Canada was smart enough not to do stupid economic policy.
Yes government has the power to do a lot of bad stuff.
However that doesn't mean they were the prime actors here. Not at all.
FAR MORE of that toxic sludge was sold to private investors (aided by a corrupt ratings process) than ever went to F&F. If it was just F&F Lehmann and Wachovia and Countrywide and Merrill Lynch and Bear Stearns etc etc etc would still be in business and TARP and TARF would not have been necessary at all.
Then there was the whole thing about CDS, naked CDS, and the entire deal with ratings agencies (which still are rotten to the core BTW), SIVs and all the multifarious derivatives based on them that F&F had absolutely nothing to do with.
Trying to blame this on government is about as naive as is imaginable.
Unregulated derivatives are at the root of this crash. What is scary to me is that nobody is seriously considering regulating OTC derivatives. It means we are wide open to future episodes because the root causes are still in place.
A and B.
If you buy a home, it's worth doing your homework. I delayed buying a home for well over 5 years, because the market was obviously a bubble. When everyone is talking about flipping X, and making "money for nothing", get out of that immediately. Doesn't matter if it's stock, houses, bonds, whatever. If you buy a house, you know you are going to pay X. If you can't pay X realistically on a long term basis, don't buy it. And there is a reason for the old rule of thumb of buying a house at 2.5 times your annual income. I knew people that when with interest only mortgages, ARMs, etc. They knew they were not making the best decision. But they couldn't see any other way to "get the house they always wanted".
Everyone involved went full retard. Consumers bought mortgages they knew they couldn't afford. Banks issued mortgages they knew were bad ideas. Investment companies packaged those bad idea mortgages into bundles of "really bad idea, now in bulk". Investors bought those bad idea mortgages. And then the government bailed them out. Which again, bad idea.
Only folks that got a beating were the ones that were reasonably smart and stayed within their means.
Is that under the Bush Administration and Congress at the time they allowed the banks and insurance companies to merge. I knew then the game was up. Insurance companies are essentially parasitic in nature.
Magic bullets are expensive and unnecessary; regular bullets will do just fine.
Snowden and Manning are heroes.
Along with that look at this:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1924831
It points out that mortgage securitization has failed every time it has been tried.
Well, Nixon wasn't a crook, so it couldn't have been him.
rewriting history since 2109
I'm glad I avoided all this drama by only investing in tulip bulbs.
Add to that the hatred of the rich and distrust of banks, with a bit of conspiracy theory for flavor
Not hatred of the rich, hatred of greed and selfishness (and there is no groupthink about this, there are a lot of slashdotters who are fine with greed and selfishness, let alone obscene amounts of money). It's rage about the fact that bankers defrauded America, almost brought he entire economy down, and were rewarded for their evil deeds. Rage against the fact that CEOs get huge multimillion dollar bonuses for running their companies to the ground and destroying working folks' 401Ks in the process. Rage that corporations get away scott-free for what an ordinary person would spend decades in prison for. Rage that you pay a higher percent of your income in federal tax than a rich stockbroker does. Rage against unfairness. Rage against the fact that 40 years ago the CEO earned 10 times as much as the janitor but now earns 400 times as much.
None of the rage is unfounded. There needs to be more rage and constructive rage.
Nobody's surprised that bankers screwed up.
Hanlon's razor doesn't apply when the person "screwing up" benefits from the "mistake". There was no screwup, the bankers got just what they wanted. It was indeed malice, fueled by greed.
They had a nice little racket, a no-lose situation. They would let anyone take out a mortgage, and would buy insurance for it. The insurance was dirt-cheap because housing prices were ballooning. They loan Joe Sixpack $200k for a small house, and three years later when he's laid off, they not only forclose, but do their damndest to make sure once he's a single payment late he'll never catch up. Then they forclose, keeping all the payments he's made on the house, then selling he house for far more than Joe paid for it. In the unlikely event the house was worth less than $200k, insurance covered the loss. There was absolutely no risk to the bank whatever.
Until, of course, their greed destroyed them. They forclosed on so many houses when the economy soured (hard to make your payments when gasoline has gone up in price 400% in four years and you got laid off or your hours cut) that the housing market tanked, and the insurance companies went broke, then the banks.
And not a single rich person was harmed in the least. many middle class people were ruined. And you wonder where the rage comes from? A lot of rich sons of bitches should have gone to prison for that fraud, but nobody did.
Yes government has the power to do a lot of bad stuff.
However that doesn't mean they were the prime actors here. Not at all.
yes they were. They pretty much
- created, legitimized and added a shitload of depth to the subprime market - if govt takes part, there are assumed guarantees = perception of safety, govt enforced ratings rules didn't help either. Without it the market would stink to your average investor
- provided liquidity to blow the bubble to epic proportions - no fucking way in hell there would be so much money flowing into subprime if the rates were not rock bottom
- failed to oversee the mess - what are these fucking morons at the SEC getting paid for? and wouldn't that mean that even the best regulation is doomed to fail as the people are the weakest link?
I didn't say the Wall Street criminals are innocent, but without the govt there would be no subprime+cdo/cds mess in the first place. Would Wall Street criminals do something else? Probably. That doesn't change the fact the govt created environment for WS hacks to thrive in and enabled the bad behavior. Who's the parent here and who's the child?
Unregulated derivatives are at the root of this crash. What is scary to me is that nobody is seriously considering regulating OTC derivatives. It means we are wide open to future episodes because the root causes are still in place.
i see 40:1 leverage as a much bigger issue, tiny bumps get amplified to a fucking Mount Everest sized problems, no shit the economy is increasingly fragile.
I wonder if NYT would have the balls to go after a financial institution before the federal government was already doing so. Anyone know of an example of investigative journalism exposing one of these politically connected and rich corporations before the USG made it known that they would not side with them?
Blame goes to those that wrote the underwriting standards for Freddy and Fanny. Blame ought to be apportioned 10:1 to the regulators.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
I actually bought a home during the bubble and was shocked at how much the bank approved me for. I had already carefully worked out what I could afford, and the bank came back offering to more than double that amount, authorizing me to borrow an amount that there is no way in hell I could possibly have sustained. Looking back, it makes perfect sense now. They didn't give a shit if I could have sustained it or not, because they were immediately going to package up my mortgage and sell it to some sucker as a AAA investment anyway. They didn't give a shit if I defaulted or not.
Did i say the WS hacks are innocent? No. But i put only half of blame on them, the other half, more crucial, goes to the govt. Without govt trying to bribe voters with post-dotcom-bust boom, there would be no problem in the first place. Let's face it - everybody loved the bubble. It takes two to tango and buttnaked peons loved no-down mortgages and flip-house-to-get-rich very much, voters loved growing GDP and wages, banksters and investors loved fat profits, the govt loved high tax revenue. Everybody looked the other way as long as possible, math be damned.
Proper incentive structure trumps wishful thinking, end of story.
Good parent (govt) shouldn't enable bad behavior of his children (WS criminals)
- it created a playground (F&F added much depth to subprime market)
- it supplied children with toys and tools (liquidity, ratings requirements)
- it didn't oversee the offsping (the SEC watching porn instead of doing their job)
Oh look, it's a total mess, how can that be?!? Looks like a multilayered parenting failure to me.
Twinkies! Where are they getting the twinkies? This is the real matter of interest here.
People here talk about homework. Tell me, how many of you have any real sum of money invested in something? What homework did you do before doing that... or was it just that your company offered to match you in a 401(k) that they designated?
About five years ago, I put some real money into bonds, which were *supposed* to be safer than stocks. I'd asked for specific AAA bonds; the people I was dealing with... gee, how odd, it was Chase Investments, via my bank at the time, weren't overly familiar with bonds; by the time they got back to me, two days later, they were gone, but they suggested some AA bonds.
I would *NEVER* have bought anything with a lower rating. Had I known then what's come out in the last 3 years or so, that companies PAY the rating companies to rate them - and can anyone give me a better example of corruption? - I'd *never* have trusted that AA rating, nor would I have bought those bonds.
Which, btw, were in Lehman Bros. This was a few months before the excrement met the impeller.
mark
Huh. Your comment has been rated "off topic". Maybe, but it's true. The only thing nerdish about this story is 'email trail'.
Seriously, they think the "great recession" equals collapse?
Methinks the author hasn't seen what a true economic collapse looks like.
That's likely because you weren't the one accused of wrongdoing and you didn't make them get a warrant.
The horror stories come from people who were actually the accused (including those that were never tried or convicted).
Too big to jail.
Don't just stand there, get that other dog!
That's funny, the ridiculous loan I was offered in '05 was most definitely not backed by F & F. It was simply a bank assuming that property values would rise fast enough that risk was zero. I ended up going with a different broker, when the one that I was working with offered me the loan to "make my life easier".
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Liquidity was provided by the large investment banks - look it up, they were leveraged 40:1 and higher. It is exactly where the money came from to purchase the MBS's that were being sold by the lenders. The only hand the government had in it was not regulating the leverage ratios properly. Look at the 2005 / 2006 issuance peaks at the huge increases in investment bank leverage that occurred at the same time!
Unregulated derivatives is the mechanism by which these banks were able to leverage themselves to these insane levels. Do you know how to calculate the leverage ratio of a naked CDS? I sure don't because it would require division by ZERO! Regulate the derivatives and 40:1 will NOT happen. It should have been done in the 1990s when derivatives took off but ex-industry people in government opposed it. Rubin, Summers etc. Guess what they are doing now? Selling derivatives!!
The term subprime covers a LOT of ground. There is a legitimate subprime market - many people are barely subprime and are still good risks. However that's not what these banks in their rush to sell MBS to Leahman etc to serve as the basis of CDOs, CDSs, etc.were issuing.
Criminals like Countrywide were selling NINJAs, liar loans, negative amoratization loans and every other scam possible, many illegal. For one reason. Greed. And the ratings agencies were slapping AAA on these! Sorry, but this not any way related to any government actions.
[Regulation of derivatives] should have been done in the 1990s when derivatives took off but ex-industry people in government opposed it.
Not just ex-industry people, and not just the ones in government. Wall St spent a lot of time and effort persuading the rest of government (administration and congress, both parties) that this was all a tremendous idea and nobody needed to worry at all. Magic money for everyone! What could possibly go wrong?
No matter how much you want to blame others, pin it on the financiers first. Every last bit of this whole crisis can be traced to them. They were the ones who pressed for deregulation. They were the ones who should have known they were doing dangerous things; it was their job to know this. They were the ones who lied and connived and conspired and tried their damnedest to stop anyone else from knowing just how bad things were getting.
We can always keep some rope back for the politicians, but our dislike for them shouldn't stop us from dealing with the actual culprits.
"Little does he know, but there is no 'I' in 'Idiot'!"
"And there is a reason for the old rule of thumb of buying a house at 2.5 times your annual income. "
Off topic, but ....
In Vancouver you can't buy a shack for that, let alone a house. And to make it more fun, interest on mortgage payments is not deductible in Canada.
No. If I buy a home, I'm paying a broker or a real-estate agent to do my homework for me. That's why I pay him the big bucks - because he knows the laws and regulations already. I shouldn't be the one calculating how much down payment I will need to avoid mortgage insurance, and how much interest I will owe over the life of the loan - that's why I'm paying thousand of dollars in fees to the other guy to do it!
I'm sorry, but at the point a broker or loan officer is giving out NINJA loans, he's engaging in fraud and he damn well knows it. It's not the borrower's job to know laws and regulations, it's the lender's.
I mean, if you went to a lawyer and paid him for legal advice, would you turn around and totally ignore his advice and do your own homework instead?
:(){
Joe Sixpack: Yanno guy, I don't think I can afford a $500,000 house on a police officer's income.
Scamming Broker: Don't worry about it. Housing prices keep going up. Sure, the interest payments on this mortgage are going to balloon in five years, but that's why you refi in four years instead.
Joe: Are you sure about this? I'm a little worried. What if I can't refi?
Broker: Don't worry about it. We've been doing this for years. I'm a certified professional. You're paying me thousands of dollars because I know what I'm doing. Trust me, you will be okay.
---
Is it still Joe's fault for believing the certified professional from which he sought advice?
And by the way, the security ratings mean quite a lot, actually. Many investors, such as pension funds, are only legally allowed to buy AAA-rated debt. The demand for AAA-rated debt is quite large, which is why they were able to sell so many toxic MBS/CDO. The demand for less-than-AAA-rated debt is MUCH smaller, and certainly not big enough to absorb all those toxic mortgages. Had the ratings agencies done their job (all of them, not just one or two), Wall Street would have been unable to sell toxic CDOs, which means they were unable to buy/sell toxic MBS, which means they were unable to buy toxic mortgages from scammers, which means the scammers were never able to lend money to people for toxic mortgages.
Investors should be able to count on the debt ratings. They're baked into laws, after all. The problem is that the people bundling the CDOs were the ones who paid for the ratings agencies to rate their debt. This creates a conflict of interest - the ratings agencies don't want to rate the debt too low or they'll lose market share to their competitors when all the firms on Wall Street go there for the better ratings. Instead, ratings should be paid for by investors, not the people peddling the debt.
:(){
see subject
Remember how everyone is a felon? All the ratings agencies committed fraud. Everyone knows it.
The government is suing S&P for $5 billion. S&P will cease to exist if found guilty (they should have settled like Goldman Sachs). And the government likely has the evidence to prove fraud, against S&P and all the others.
Not that I think it's right. But if S&P had just refused to engage in fraud, the Feds would have no leverage. You reap what you sow.
:(){
Blame goes to those that wrote the underwriting standards for Freddy and Fanny
Keep in mind that "sub-prime" is defined as "not underwritable by Freddy and Fanny".
That one links to this Salon article: http://www.salon.com/2000/05/26/free_love/
I've always wondered, is that article for real, or is it an elaborate troll itself?
The people who knowingly borrowed more than they could afford are certainly part of the blame. However, follow me for a second. Who do you think would know more about house buying, including getting the loans and everything - a person who has never bought a house, or a person who has bought one house? Now, who will know more - the person who has bought one house, or the person who has bought 5 houses? Now, who will know more - the person who has bought 5 houses, or the bank that has provided 100's if not 1000's house loans, and are the ones who decide the credit worthiness of the people that they loan to, and who tell other financial institutions about how risky their little portfolios are? I know all other things being equal, I would personally assign more blame to the entities who had access to more information - in this case, the banks has far more information on house buying than any of the individual buyers. And in this case, all things are certainly not equal, since the banks were guarding the hen house (reporting credit worthiness) and had control over far more capital than the individual buyers.
Got? We still are!
I worked for lawyers back when I did international "munitions" exporting. Primarily FLIR cameras, still under ITAR. I second guessed lawyers all the time when it came to tech issues and how they fell under the law.
Why yes, I do my own homework even when I consult a lawyer. So should anyone. NOLO has many inexpensive awesome books. I usually do my homework in advance, write up everything, highlight the important parts and ask for the lawyer's opinion.
Your lawyer and your brokers have legal responsibility to give you good advice. However, they may not have incentives that match that responsibility. Suppose a lawyer was somehow obligated to handle a matter for a set fee. The advice will near ALWAYS be "settle". Because why work five times as much for the same cash?
Trust me. Take personal responsibility. Always. And knowing more rarely hurts, if you know your limits. The loan officer represents the bank, not you. Why would you ever trust their interests over your own?
I can believe it. Housing has gotten very expensive for what you get. Still, buying at or below your means is usually a good rule of thumb.
I'll note that you appear to have ignored mysummary.
I'd agree the person taking the loan should have used more diligence - but the disparity is staggering. Blame ought to be apportioned 10:1 to the Bank.
I think both are to blame. It certainly would be best if consumers would know what they're doing - but it's really not that many people who even *can* do what we do routinely - at least that appears to be what I see when I interact with lots of "common" people.
But "should" do - doesn't give any remote pass to those that simply *had* to know what they were doing was at least morally bankrupt - and eventually bankrupt in the real world too.
Blame does belong on both sides. But blame shouldn't be placed equally, IMO. The guilt from the mortgage lenders all the way upward to those rating them and the CDO's and default-swaps etc - they have vastly more blame than the unsophisticated consumer of these loans.
If I rob a single store for a TV, I ought to do time. I'm not blameless.
But if I setup a cartel, a system designed to rob and move the goods for thousands, perhaps millions, of such instances ... Well the law, if it's fair, ought to treat that in a vastly different way. We as a society, if we're moral, should also recognize there's a vast difference.
Some people on the borrowing side did play the game, though not anywhere close to the banks level. A larger number should [and probably did to some extent] have known they were farther out than was wise. More than few, almost certainly were unaware of the risk and unwise direction they had been steered.
But none of these come *remotely* close to the amoral, venal and bankrupt moral compasses that ran the banks.
You seem, again, to confuse *ideal world approaches* with how it often goes.
No, I wouldn't buy a car at most car dealerships - they're out to sack as much money from me as they can.
And while I can't prevent others from buying from the dealership and getting more of their money taken than is required - we can [and should] keep the dealership from committing fraud in doing so.
I do my homework too - but there's almost always some portion of the world we don't do as well as others. And in those cases, we'll be relying on the skills of someone else to assist us. In those cases, it's the moral, or not legal, responsibility of those doing that work to do it well.
Perhaps I can't take them to court and extract what they ought to cough up - but if it's at all a just world, they'll be paying back in some cosmic sense for a long time.
But let's not confuse - what one "ought" to do and lay all the blame on the person who was trusting the person they paid to do job X to have actually done job X. It may have been dumb, but the guy who was supposed to do job X is 90% liable and the guy who trusted him is 10% guilty.
By not filing criminal charges, the government got a lower burden of proof — preponderance of the evidence rather than beyond a reasonable doubt — while the potential for a $5 billion fine provides punishment as severe as any criminal case against a corporation could.
I don't know - isn't that the core of the problem? Because the participants knew they were never going to face jail-time, they knew they could do what they want. So what if the bank/credit agency got fined after the fact? By that time, the bonuses have been paid.
And why is the credit agencies getting off so lightly? They were supposed to be the referees in this system. Banks are being forced to ring-fence their investment and retail arms - surely the credit agencies have to answer for their conflict of interest too?