How “Brazen” does a Bankster’s Fraud have to be before he’s Prosecuted?

By William K. Black

I’ll get the obvious out of the way first and then turn in future columns to the aspects of the Department of Justice’s (DOJ) civil suit against Bank of America (B of A)/Countrywide that are vital to understand but are more subtle.  The obvious issue arises from the facts that the DOJ alleges that its investigation has found.  The complaint and the DOJ press release state that elite financial criminals committed tens of thousands of “brazen” frauds targeting U.S. government funds.  We’re on the hook for all the resultant losses because Fannie and Freddie were systemically dangerous institutions (SDIs) that the Bush administration concluded had to have their creditors bailed out to prevent a far graver global systemic crisis.  DOJ alleges that the fraud persisted for years, that senior officers were warned that the lending program they designed would cause endemic fraud, that the senior officers knew that B of A was selling billions of dollars of fraudulent loans to Fannie and Freddie by making false representations, that B of A’s senior leadership consciously covered up the information that the loans were commonly fraudulent, that the senior leadership created perverse bonus systems for their junior (non-professional employees with the expectation, desire, and actual knowledge that doing so led to the origination (and sale to Fannie and Freddie) of endemically fraudulent loans, and that even when Fannie and Freddie confronted B of A with its violations of its representations and warranties B of A refused to honor it contractual obligation to repurchase the fraudulent loans.  DOJ alleges that the frauds persisted for years and continued after B of A purchased Countrywide.  The obvious question (not asked by the AP, WSJ, and NYT articles about the lawsuit in the version on line last Wednesday night) is: why the DOJ has refused to bring a criminal prosecution of the senior officers who led this “brazen” fraud?

The only slightly less obvious question (again, not asked by any of the three articles) is: if the DOJ is going to bring only a civil complaint, why did it fail to include the culpable senior executives in that civil lawsuit?  It does not appear that the reporters asked the DOJ either of these questions.  Our top reporters are so used to DOJ abdicating its responsibility to prosecute elite frauds that they approach the newest example of elite impunity from criminal sanction as not worthy of discussion or even note.  The obvious has become unfathomable to our elite media.

5 responses to “How “Brazen” does a Bankster’s Fraud have to be before he’s Prosecuted?

  1. Link is not working on “Why are there no famous whistleblowers …..”

  2. Justaluckyfool asks, Where is the “Robert Montgomery” of today, who will finally file the Class Action Suit to reclaim the $14 trillion loss by homeowners that were the victims ?
    But then again the banks have proven, “The Rule Maker is above the Rules.”
    As Frederick Soddy wrote in 1926,1933 in “The Role of Money”,”
    “This book attempts to clear up the mystery of money in its social aspect. With the monetary
    system of the whole world in chaos, this mystery has never been so carefully fostered as it is to-day.
    And this is all the more curious inasmuch as there is not the slightest reason for this mystery.
    This book will show what money now is, what it does, and what it should do. From this will
    emerge the recognition of what has always been the true role of money. The standpoint from
    which most books on modern money are written has been reversed. In this book the subject is not
    treated from the point of view of the bankers as those are called who create by far the greater
    proportion of money but from that of the PUBLIC, who at present have to give up valuable
    goods and services to the bankers in return for the money that they have so cleverly created
    and create. This, surely, is what the public really wants to know about money.

    It was recognized in Athens and Sparta ten centuries before the birth of Christ that one
    of the most vital prerogatives of the State was the sole right to issue money. How curious that
    the unique quality of this prerogative is only now being re-discovered. The” money-power ” which
    has been able to overshadow ostensibly responsible government, is not the power of the merely ultra-
    rich, but is nothing more nor less than a new technique designed to create and destroy money
    by adding and withdrawing figures in bank ledgers, without the slightest concern for the interests of
    the community or the real role that money ought to perform therein.

    The more profound students of money and, more recently, a very few historians have realized
    the enormous significance of this money power or technique, and its key position in shaping the
    course of world events through the ages. … It is concerned less with the details of particular schemes
    of monetary reform that have been advocated than with the general principles to which, in the
    author’s opinion, every monetary system must at long last conform, if it is to fulfil its proper role
    as the distributive mechanism of society. To allow it to become a source of revenue to private issuers
    is to create, first, a secret and illicit arm of the government and, last, a rival power strong enough
    ultimately to overthrow all other forms of government. “

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