Why Don’t White Collar Criminals Go to Jail?
I’m not trying to be argumentative, I just have a question. Why do petty criminals, shoplifting under $100 and people caught with drugs classified as personal recreation, they take or smoke it themselves only, sent to prison for 5 to 7 years and people who steal millions are not even arrested much alone prosecuted?
I’m not talking the high media exposure some pyramid schemes or Investment schemes built on illusions, a couple of them are in jail, I’m talking about the executives of Banks, the very people who sent an entire country’s economy into a free fall depression.
Prove it you say. OK.
There are strict underwriting rules which apply to banks evaluating and granting mortgage loans. Underwriting, means facts pertaining to the applicant’s loan, such as income, assets and proof of a job are verified for the truth. Can’t prove you can pay the loan back, no loan. Simple.
However, banks became creative in their obligations to adhere to the law in underwriting compliance. They created a doc loan, which means there was no verification if the applicant actually had the assets he claimed. The NINJA loan, where there was no proof or verification of an applicants income, assets or if he even had a job.
In the industry these loans were known as “Liars Loans” and were openly discussed as just that. Every knew everyone was lying.
Wait a minute! Why would banks lend money they knew they’d never get back, that doesn’t make sense. Well, you’re right unless you’re a bank.
You see, the bank that issued the loan made money, the bank(s) who securitized the loan made money, and the bank(s) who serviced the loans made money.
Wait, that still doesn’t account for the initial loan. Oh, that money. Well, the banks that securitized, which means sold the loans to other people recouping the initial loan amount, making sure the banks not only got their money back, but also reaped amazing profits.
You still can’t believe what you’re reading, the banks could not have known these loans would all end up in foreclosure. In 2005 the FBI, investigating fraud in the mortgage industry issued a report to Congress which stated Loan officers, Mortgage Brokers, Real Estate agents, Lawyers and Appraisers were all complicit in committing mortgage fraud in 80% of the sampling cases investigated. Everyone knew they were crooks.
The American Taxpayer was placed behind the proverbial 8 ball and had to bail these banks out of their self created financial mess. That would be bad enough if the story stopped there, but it doesn’t.
The government ordered banks to modify the terms and salvage as many troubled loans as possible. However, banks weren’t paid to salvage loans, they were paid to foreclose on loans. That’s the reason nobody could figure out why, with the billions of dollars the government made available to restructure loans, nobody could get a loan salvaged. The banks pocketed the bail out money then foreclosed on the loans the money was intended to save.
Possibly the worse yet to come out of this quagmire is the legal system has been dragged through the mud and totally ignored by the banks. It wasn’t until one Judge finally took a stand and stopped a foreclosure because the bank couldn’t prove who owned the house, was the problem exposed.
The banks had destroyed records, by mistake of course, and had played such a ball under the nut shell, quick hands scheme, that nobody could actually present documentation proof of who owned the property, but the bank was sure the homeowner didn’t.
I’ll get off my soap box now with one last question, “Why Don’t White Collar Criminals go to Jail?”