Monday, June 28, 2010
Where's the Crime?
"US authorities arrested Lee Farkas, the high-rolling former chairman of a failed Florida mortgage lender, and charged him with orchestrating a seven-year, multibillion-dollar fraud that contributed to the collapse of a major bank and targeted the US government. ... On Wednesday, the US alleged in a criminal indictment that Mr. Farkas had been propping up his firm since 2002 using an array of fraudulent schemes that have cost investors and government programs in excess of $2 billion. ... The Federal Housing Administration said Wednesday it had lost $3 billion because Taylor Bean had lied about the health of loans it was servicing for the public housing agency. ... 'The fraud alleged here was truly stunning in its scale and complexity,' said Assistant Attorney General Lanny Breuer, who heads the [DOJ's] criminal division. ... The indictment is the largest case in which a bank has been accused of attempting to defraud the bank-bailout fund. It also comes as the Obama administration comes under pressure to hold bankers accountable for their perceived role in helping cause the financial crisis. According to the government's indictment, which was unsealed Wednesday, Mr. Farkas and his co-conspirators started the fraud by siphoning money from Colonial, which lent it billions of dollars to buy mortgages, and from its own funding arm, Ocala Financing", my emphasis, Thomas Catan & Evan Perez at the WSJ, 17 June 2010, link:
It seems Taylor Bean was run like a major Wall Street house, i.e., to benefit its officers. As much as possible was apparently stripped from it then it failed. So? Is Farkas' problem failing to install a "former" officer as Treasury Secretary? Didn't Fannie Mae have multiple accounting restatements involving billions of dollars? Won't Freddie and Fannie need about $400 billion in bailouts? Didn't AIG get $182 billion? Why is the DOJ bothering with Farkas? What's wrong with propping up a failing enterprise anyway? "Stunning in its scale"? Huh? Anyone remember Lehman and Repo 105?