Mortgage Fraud Prosecution

It seems that in the run up to the crisis, the big banks were doing their best to play ostrich.  In itspublic report, the FCIC wrote, “Only a small portion—as little as 2% to 3%—of the loans in any deal were sampled.  When those loans turned up turnips, the banks didn’t do the logical thing, and have Clayton go investigate a bigger sample. Instead, they hid their heads in the sand—and didn’t bother to inform their investors of any of this. “Prospectuses for the ultimate investors in the mortgage-backed securities did not contain this information, or information on how few loans were reviewed, raising the question of whether the disclosures were materially misleading, in violation of the securities laws,” the FCIC wrote in its report.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s