More Evidence of Systemic Fraud

by lizard

Our financial markets continue to be driven by liars, addicts, and political enablers. Just this week we’ve seen markets react to the prospect of the Federal Reserve’s cooling of their fiscal methadone program, and two prominent disclosures of internal documents from Bank of America (All In) and ratings agencies like Moody’s and Standard & Poor (Rolling Stone), indicating that, within these institutions, it was common knowledge that the financial system was being gamed.

Chris Hayes’ program, All In, reported on the Bank of America bombshell. This is an excerpt from the show’s transcript (you can watch the video at the BoA link):

we were told to lie. those are the words of a bank of america employee describing what her supervisors asked her to do. and she’s not the only one. in an absolute bombshell filing in federal court , sworn affidavits describe an intentional strategy on the part of the bank to systemically lie to struggling homeowners right up to the point of foreclosure. to hoodwink borrowers, stall for time and maximize the amount of money bank of america got. now, we’ve known for years in talking to the people on the receiving end of the bank’s treatment that borrowers seeking loan modifications were strung along and screwed over. now we have what appears to be the smoking gun. here’s just a sample of what the bank of america employees said under oath. simone gordon, senior collector, 2007 and 2012 , “we were told to lie to customers and claim that bank of america had not received documents it had requested and that it had not received trial payments when, in fact, it had. employees were rewarded by meeting a quota of placing a specific number of accounts into foreclosure.” erica brown, customer service representative , 2009 pane 2010 , “during my time at bank of america i saw well over 100 cases in which a bank of america analyst canceled loan modifications and stated nonpayment as reason for cancelation when it was apparent from the computer system that the homeowner had actually made the required payments.” william wilson , underwriter then- case management team manager, 2010 to 2012 . “employees who challenged or questioned the ethics of bank of america ‘s practice of declining modifications for false and fraudulent reasons for often fired.” teresa, collector 2009 and 2010 . “the information we received in group meetings showed me that bank of america ‘s deliberate practice was to string homeowners along with no intention of providing permanent modifications.”

Matt Taibbi reported on the ratings agencies conscious deception:

Thanks to a mountain of evidence gathered for a pair of major lawsuits, documents that for the most part have never been seen by the general public, we now know that the nation’s two top ratings companies, Moody’s and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash.

In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked.

“Lord help our fucking scam . . . this has to be the stupidest place I have worked at,” writes one Standard & Poor’s executive. “As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it,” confesses a high-ranking S&P analyst. “If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value,” complains another senior S&P man. “Let’s hope we are all wealthy and retired by the time this house of card[s] falters,” ruminates one more.

Will these institutions ever experience actual accountability? Will our political system ever put in place policies to keep these greed-driven addicts from blowing up the global economy, again?

  1. Turner

    So long as everyone is afraid of recognizing and stating publicly the fact that capitalism is an evil in the world having nothing to do with the “freedom” of anyone except wealthy insiders, the discussion about what’s going on won’t happen.

    Question capitalism and the laughable notion of a “free market” and straightaway you’re called un-American and a communist.

  2. JC

    Well, now that the “Justice” Dept. has revealed that is is unwilling to prosecute banks, bankers, and probably raters (might hurt the world economy, dontcha know?), nothing will change (actually, it’ll just get worse). We’ll get a handful of lawsuits, and a piddling of dinky checks written out to affected foreclosees to shut them up… again. and then, yawn, the media can go back to sleep.

  3. lizard19

    Whitney, calling out Bernanke:

    So let’s cut to the chase: The reason Pavlov Bernanke took away the punch bowl on Thursday and put markets into a tailspin, was because stocks are overheating and because his goofy printing operations have generated all kinds of risky behavior. Keep in mind, that it was Bernanke who said that he thought that goosing stock prices would create the “wealth effect” that would lead to a broader recovery in the real economy. Just as it was Bernanke who signaled that he would keep stocks from breaking lower. (The “Bernanke Put”). In other words, investors have just been following their Master’s lead, which is why they loaded up on stocks to begin with. And that’s why junk bond yields dropped to record lows. And that’s why margin debt climbed to record highs. And that’s why all the big corporations have been buying back their own shares hand over fist. And that’s why the financial markets are riddled with bubbles. It’s because Bernanke tacitly implied that he would support rising stock prices with lavish infusions of funny money NO MATTER WHAT.

    Well, guess what? Now Bernanke is worried. He’s worried that the real economy is still in the doldrums while bubbles are popping up everywhere in the financial markets; in stocks and bonds, CLOs, CDOs, MBS and every other dodgy debt instrument, derivative or swap. It’s all getting very frothy thanks to the Bernanke.

    So, how does the Fed chair intend to “contain” the emergent asset bubble until he retires at the end of the year and returns to blissful academia?

    He’s going to keep doing what he’s doing right now; cherry-picking the data so he can rattle Wall Street’s cage every so often and keep stocks from zooming too far into the stratosphere. That’s the plan. Of course, he could just tell the truth–that QE has been great for Wall Street but done jack for anyone else. But I wouldn’t count on that.

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