Hey! Look Over There!
Apparently the FBI and the Justice Department had figured out at least as early as September, 2004 that there were some shady dealings going on in the home mortgage business, according to this story in today's Los Angeles Times.
Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.
"It has the potential to be an epidemic," Chris Swecker, the FBI official in charge of criminal investigations, told reporters in September 2004. But, he added reassuringly, the FBI was on the case. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.
So, why didn't the FBI do something about it? Well, there apparently were several reasons. Banks and mortgage companies didn't want to cooperate because they saw the potential for making a whole lot of money in the burgeoning market. More importantly, however, the White House came up with a list of priorities for the FBI and Justice Department and investigating mortgage fraud just wasn't high on that list.
Most observers have declared the mess a gross failure of regulation. To be sure, in the run-up to the crisis, market-oriented federal regulators bragged about their hands-off treatment of banks and other savings institutions and their executives. But it wasn't just regulators who were looking the other way. The FBI and its parent agency, the Justice Department, are supposed to act as the cops on the beat for potentially illegal activities by bankers and others. But they were focused on national security and other priorities, and paid scant attention to white-collar crimes that may have contributed to the lending and securities debacle. ...
But sources familiar with the FBI budget process, who were not authorized to speak publicly about the growing fraud problem, say that he and other FBI criminal investigators sought additional assistance to take on the mortgage scoundrels.
They ended up with fewer resources, rather than more. ...
the tepid response also reflects a broad realignment of law-enforcement priorities at the Justice Department in which mortgage fraud and other white-collar crimes have been subordinated to other Bush administration priorities.
That has reflected, in part, the ramp-up in national security and terrorism investigations after the Sept. 11 attacks. But the administration has also put more support behind efforts against illegal immigration and child pornography. [Emphasis added]
In other words, experienced investigators were pulled off the white collar crime units and sent over to other units to draft national security letters, peruse our email and telephone records, and go after those pesky illegal immigrants. As a result, our economy is in shambles, people have lost their homes and what investments they put into those homes, neighborhoods are beginning to see the blight that comes with vacant houses, and local governments are being starved by a lack of property taxes.
All because the Deciderer, with the help of his have-more friends, decided there were "more important" things to go after.
Heckuva job, George.
Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.
"It has the potential to be an epidemic," Chris Swecker, the FBI official in charge of criminal investigations, told reporters in September 2004. But, he added reassuringly, the FBI was on the case. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.
So, why didn't the FBI do something about it? Well, there apparently were several reasons. Banks and mortgage companies didn't want to cooperate because they saw the potential for making a whole lot of money in the burgeoning market. More importantly, however, the White House came up with a list of priorities for the FBI and Justice Department and investigating mortgage fraud just wasn't high on that list.
Most observers have declared the mess a gross failure of regulation. To be sure, in the run-up to the crisis, market-oriented federal regulators bragged about their hands-off treatment of banks and other savings institutions and their executives. But it wasn't just regulators who were looking the other way. The FBI and its parent agency, the Justice Department, are supposed to act as the cops on the beat for potentially illegal activities by bankers and others. But they were focused on national security and other priorities, and paid scant attention to white-collar crimes that may have contributed to the lending and securities debacle. ...
But sources familiar with the FBI budget process, who were not authorized to speak publicly about the growing fraud problem, say that he and other FBI criminal investigators sought additional assistance to take on the mortgage scoundrels.
They ended up with fewer resources, rather than more. ...
the tepid response also reflects a broad realignment of law-enforcement priorities at the Justice Department in which mortgage fraud and other white-collar crimes have been subordinated to other Bush administration priorities.
That has reflected, in part, the ramp-up in national security and terrorism investigations after the Sept. 11 attacks. But the administration has also put more support behind efforts against illegal immigration and child pornography. [Emphasis added]
In other words, experienced investigators were pulled off the white collar crime units and sent over to other units to draft national security letters, peruse our email and telephone records, and go after those pesky illegal immigrants. As a result, our economy is in shambles, people have lost their homes and what investments they put into those homes, neighborhoods are beginning to see the blight that comes with vacant houses, and local governments are being starved by a lack of property taxes.
All because the Deciderer, with the help of his have-more friends, decided there were "more important" things to go after.
Heckuva job, George.
Labels: Bush Legacy, Economy, Justice Department
posted by Diane at 3:41 AM
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