I'm so sick of the lawless elite. Is it time to pull out the torches and pitchforks yet? If not, when?

I am a Realtor in the Phoenix area and have long since felt that Countrywide got off easy in the whole financial meltdown mess. They were in the middle of it and one of the largest mortgage originators in the country.

I have interfaced with numerous staff there and have felt them to be arrogant - quick to talk about their 'benefits' but absent any mention of their hand in this whole mess.

As such, I am hopeful that all eyes will turn to them and finally we will see some action taken regardless of their now being owned by Bank of America.

Too much happened. Too much cost.

I wrote the following post back in September 2008.

David Lorti

Like many people, I am watching closely the developments that are taking place in the financial markets and have much concern. There are lots of things happening and happening rapidly. The demise of Lehman Brothers (notwithstanding some of their assets being sold to Barclays) was disturbing. The infusion and ownership position the U.S. government took in AIG is shocking. Now, the latest news rumors is that Morgan Stanley is in talks with a potential suitor (Wachovia being mentioned here). And, it looks like Washington Mutual has been looking for a buyer as well. This talks nothing to the list of banks that are being closely watched. Rumor has it that there is a second list of ‘watch but don’t publicize that they are being watched’ for potential insolvency.

Like other Americans, this has me very edgy. It’s not having any idea as to where this is going and how far it might be going that gets me that way. However, aside from my comments above, I will take a different tack here and ask some questions.

With all of the imminent collapse happening with long-established financial entities, the questions as to where in the ecosystem did the toxin get in the stream and create this market malaise and what has happened to them?

This question is loaded. I am looking for the truer perpetrators of loan products that allowed people to get into homes and purchase second (and more) properties when they clearly did not have the capability to afford the properties in the first place. This comes back to the lenders who dispensed loans willingly and agressively. Some of these companies have died away. However, some specialized in the origination of the loans and then sold them to the secondary market.

Coming to my conclusion here, I have two comments that are sure to cause some stir. First, I don’t believe that the lenders involved in the actual front-lines of selling the loan products that would eventually be bundled, sliced and diced, and repackaged again to these Wall Street firms, have been penalized enough. I look at Countrywide as being the single largest loan originator in the market at the time and the fact that they are largely intact (though now part of Bank of America) as being a travesty. Part of this is my dealings with a few people there in the distant past that were quick to call out Countrywide’s financial health given it did not hold onto the loans and so didn’t have the exposure and a noticeable absence of a sense of culpability for the problems of the market.

Back then, I wondered and leaned toward the perspective that Countrywide should have been allowed to fail so that the market could see the implications of their actions. Given the bloodletting this week, I am convinced that a full failure of Countrywide would have been a small concession to the market if that was truly allowed to happen. Acquisition by Bank of America wasn’t good enough. Continuation of this operation (Countrywide largely does operate as a separate entity under BofA purview) shouldn’t be the case.

Secondly, Americans haven’t seen much in the way of active investigations, indictments and the like for those people who committed loan fraud. I think I heard of a couple investigations that took place once upon a time. However, I haven’t heard of much more than that. Fraud isn’t necessarily the only thing that happened here. Lax credit requirements and perfectly legal circumstances helped fuel the greed too.

What I am getting at here, is that there needs to be a hard hitting and rapid series of investigations that get to the heart of who helped to fuel this whole fiasco – from the individual investor who misrepresented their financial position to accumulate properties, to the lender representative and overall entity that knowingly went along with that investor to make the deals happen, to the lender and overall entity that lent to buyers that did not have the capability, to lenders that misrepresented the quality of the portfolios they were shipping off to the secondary market. The U.S. government needs to chase down people and prosecute so that the message at the lowest levels of the industry rings through – This will not be repeated again.

now all they need to do is ask a certain Swiss bank just how much money he has in his account...

Oops, I forgot. For letting the bank off, they got some names which were most likely already known... and Mozilo was most likely NOT one of them...

He looks like a Mafia loan shark.
Oh wait. He is.