The enormous mortgage-bond scandal

Felix Salmon has found an interesting document in the financial crisis inquiry hearings.

It seems the banks not only knew that the loans they were selling to investors generally failed to meet underwriting standards, they were so careless as to have documents lying around saying so in plain English.

Seems like they were a bank of morons.  When I was involved in criminal conspiracies, none of us would write in plain English, and we would very rarely speak in plain English.

But if you are a regular visitor to his blog, that we are ruled by dim witted criminals is unlikely to surprise you. What has, however, surprised me, is that the political branch of the conspiracy failed to swiftly throw the bankster branch to the wolves and blame them for everything. If I was in Obama’s shoes, in 2009 I would have been preparing federal prosecutions to generate interesting headlines just before the 2010 mid term elections, but instead both political parties continue in cover up mode.

The ruling elite is too soft on each other to hold on to power for very much longer. As soon as we get a really big crisis, are likely to fall.

2 Responses to “The enormous mortgage-bond scandal”

  1. Bill says:

    They key questions are how many prosecutors are there with jurisdiction and how many people are there with standing to sue and he resources to do it. If there are too many to pay off/threaten, then Congress will have to pass some blanket amnesty. And that will likely have to be done in public in the full light of day.

    The Chinese will not be happy. Americans may even be unhappy enough to do something about it.

    • jim says:

      The senior tranches wound up sold to the government, so no will to sue. The holders of the junior tranches, however, have standing, power and money, and are mightily pissed off. They have an incentive to open the can of worms and wave the worms around. Buying them off could get expensive, but might be done.

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