The following is a synopsis of "You, the Jury: How Wall Street Cashed In On the American Dream and Nearly Killed It."
A 40 year history of mortgage fraud, the hows and whys of what Wall Street did between 1999 and 2007, and the shocking lack of prosecution by, especially, federal authorities, are laid out for your information, and, hopefully, your civic outrage. For the past 13 years our criminal justice system has been a system of men, not laws. Only an understanding of exactly what happened, who did it, and how, can equip us to prevent even more fraud in the future. Fundamental reform is necessary to rebuild the housing industry and the financing tools which drive it. You the Jury provides a roadmap of understanding, prevention, and cure.
Mortgage fraud caused the collapse of the America housing market. Mortgage fraud caused the collapse of the financial markets and the insurance markets, and threatened the global economy.
Mortgage fraud was practiced on a systemic level by major Wall Street investment banks, major commercial banks, mortgage banks, and virtually the entire real estate industry. From personal experience with Bear Stearns, Lehman Brothers, and Credit Suisse, Indy Mac, among others, I know the practices used to knowingly create fraudulent mortgages, knowingly package them in securities, and knowingly reap hundreds of billions in profit, while passing certain failure, not mere risk, on to unsuspecting investors and insurance companies.
Government response to criminal conduct has been superficial and ineffective. President Bush's Attorney General Mukasey dismissed mortgage fraud as a “street crime” and left prosecution to understaffed and overwhelmed “local prosecutors.” In 2008 mortgage fraud was number 106 on the Justice Department’s priority list. Two Presidential Administrations and the current Attorney General, Eric Holder, have looked the other way. Rather than demand accountability, Government has paid trillions to investment banks, commercial banks, insurance companies, and their investors to hold them harmless and allow them to profit from their own crimes, while leaving the taxpayer holding the biggest bag in history. Goldman Sachs sold mortgage backed securities at a premium on the market, while simultaneously selling those same securities short in its own portfolio. Do you think they knew something about the quality of their collateral?
Bombastic calls for more regulation, more oversight, and more laws are camouflage for a lack of political will to prosecute, both criminally and civilly, the Executives, Boards, and Institutions which are responsible for systemic fraud. A culture of taking profit while shifting risk has victimized the American people. Government has added to the problem, not solved it.
Mortgage fraud has been going on for over forty years. Without serious reform, without the creation of a system which shifts risk back to the financial, mortgage, and real estate industries, there will always be another cycle of corruption, and we will pay for it again and again.