"Foreclosures are occurring at the highest rate in decades--and as a result, lenders are acquiring homes faster than they can sell them off. Last year, sales of foreclosed homes rose just 4.4%, while the supply more than doubles, according to First American CoreLogic", WSJ, 25 March 2008.
This looks like a real scam and in total exceeds my Blankfein test. However, it appears the Feds are trying to make the banks into innocent victims of scams instead of beneficiaries of them. The Fed's recent bailout of Wall Street, not Bear Stearns, required it put out $29 billion to protect JPMorgan. The taxpayers losses on this transaction alone should greatly excced all the banks may have lost due to fraud.