The latest government settlement of foreclosure crimes”is an epic failure of law and a triumph for bank attorneys,” according to Barry Ritholz in his Washington Post column today.
I have been saying this for some time now (see Robo-signing Bank Settlement is a Criminal Sell Out and First Bank Fraud, Now Political Fraud), as have others like Simon Johnson in Too Big to Jail, but Ritholz spells it out in detail:
“The bigger issue is the economics of criminality. Most people who get caught committing crimes are punished. Commit a felony — if you run a bank — and your shareholders pay a monetary fine. Violating the law has merely become the banker’s cost of doing business.”
“Thus, the robosigning agreement has allowed the mass production of perjury. It has gone unrecognized and unpunished. It has made perjury a business expense, like travel or office furniture. The same reckless approach to giving loans to unqualified people was institutionalized, leading to another reckless approach to foreclosing homes.”
“We still don’t know who ordered these crimes, who is responsible for this, whether they still are in their jobs — or whether they are in a position of authority to do the same thing again.”
“Last, politically, the settlement reveals the corrupting influence of bank bailouts. Government is supposed to enforce laws equally and fairly. Instead, it is protecting its investments in rogue banks. They are committed to their original error and are loath to admit it. This is the reason that after a surgical accident, a new surgeon does the repair. He is objective and has nothing to hide. Conflicted governments, though, are focused on their reputation and reelection.”
“The robosigning agreement will serve as an exemplar to future generations of what not to do when confronted with failing banks.”
Read the full story here.