Saturday, 17 December 2011

Six US 'banksters' now face civil fraud charges

As ever, I didn't know whether to laugh or to cry, when, today, I read the latest news from the USA.
Six former executives of what were once styled as 'the world's largest mortgage agencies', 'Fannie Mae' and 'Freddie Mac,' have been charged (in a civil prosecution filed in a federal court in New York city, by the US Securities and Exchange Commission) with fraud.
Meanwhile, years after the event (and with a global economic depression looming), the US Justic Dept. says it has 'begun investigating.'
According to the NY lawsuit, 53 year old Daniel Mudd,  50 year old Enrico Dallavecchia and 53 year old Thomas Lund (the former: CEO, Chief Risk Officer and Executive Vice President of 'Fannie Mae'), along with 68 year old Richard Syron, 58 year old Patricia Cook and 53 year old Donald Bisenius (the former: CEO, Executive Vice President and Chief Business Officer of 'Freddie Mac') made'material mis-statements.' 
In plain English, these shameful, but shameless, 'banksters' actually stand accused of telling multi-billion dollar lies, and of provoking, and attempting to conceal, the onset of the largest global financial catastrophy since the 'Wall Street Crash' of 1929 (which itself triggered the 'Great Depression' of the 1930s - and which, in turn, led to rise of Fascism and WWII).
The lawful traditional business of 'Fannie Mae' and 'Freddie Mac' was the buying of secured mortgage loans from banks and other institutional lenders, packaging these debts into guaranteed-bonds and then selling them to investors internationally. During the early years of the 21st century, a significant part of the previously-lawful enterprises of both these companies became completely unlawful, because their chief executives oversaw the buying, packaging and peddling of liar-loans which (in the pursuit of huge short-term profits for banks and resulting huge bonus payments for bankers), had been fraudulently-approved to many millions of poor Americans who could not afford to repay them (in the long-term). Whilst the US real estate market remained strong, the looming-catastrophy remained hidden. However, when the market collapsed, 'Freddie Mac' and Fannie Mae' had already knowingly: bought, packaged, peddled and fraudulently 'guaranteed' a phenomenal quantity of worthless paper to countless victims around the world.
In 2007, the 'Fannie Mae' executives falsely-declared that their company held just $4.8 billions of high-risk loans, when, in fact, it was facing inevitable collapse due to $43 billions of toxic-debt (some 11% of its total portfolio). Similarly, in 2006, the 'Freddie Mac' executives falsely-declared that their company held between 2 and 6 $billions of high-risk loans, when, in fact, it was facing inevitable collapse due to $141 billions of toxic debt (some 10% of its total portfolio). Furthermore, by 2008, 'Freddie Mac's' toxic debt had climbed to $244 billions (some 14% of its total portfolio).
In September 2008, the truth finally came out, and  Bush administration was obliged to take control of both these secretly-insolvent agencies to prevent them from collapsing. Their top executives were either fired or they were forced to resign. To date, US tax-payers have given $150 billions to keep them afloat, and this could rise to a colossal $259 billions.
All this, means that certain US civil regulators have lately-accepted that persons in control of at least two major US financial institutions were engaged in a pattern of ongoing major racketeering activity, comprising fraud and the obstruction of justice, etc., during 2006- 2007. However, the US Justice Dept has (so far) refused to enforce federal RICO legislation which covers these serious criminal acts.
Perhaps the most extraordinary thing to come out of these recent civil charges, is the immediate defence to them. The executives' attorneys don't actually deny the charges, what they say is that US government regulators are in no position to charge their clients with fraud, because US government regulators were, at all times, fully-complicit with what was occurring. 
I would respectfully suggest that the US Justice Dept. should perhaps be investigating, and charging, certain officials at the SEC, under RICO legislation, but then there are certain officials at the US justice Dept. who probably should be investigated themselves.
Difficult as it is to believe, Daniel Mudd ( who was fired from 'Fannie Mae' in 2008) currently holds the position of CEO of the 'Fortress Investment Group' in New York; whilst Richard Syron (who resigned from 'Freddie Mac' in 2008) is an Adjunct Professor at Boston College.
Personally, I wouldn't want to employ either of them (not even to sweep my floor). 
David Brear (copyright 2011)

No comments: