Before he resigned last week in the wake of a damning Frontline documentary, Lanny Breuer, the head of DOJ's criminal division, was confronted with a persistent question: despite the much heralded formation of a "Residential Mortgage Backed Securities Working Group" a year ago, and a similar task force in 2009, could he point to a single case where a major Wall Street bank or executive faced criminal charges for committing mortgage securities fraud?
Over and over Breuer responds through evasion, pointing instead to people whom DOJ has prosecuted for other sorts of financial fraud. For years now this has been DOJ's strategy: to rattle off the number of cases of "financial fraud" or "mortgage fraud" it has won, not a single one of which is the kind of case the public has been demanding. Instead, DOJ cites cases in which individual hucksters have obtained loans under fraudulent circumstances, thereby cheating the lenders.
It could just be coincidence, but a week after the Frontline documentary aired my inbox seemed to be full of headlines about federal prosecutors and mortgage fraud, and they're a perfect illustration of these "small fry" prosecutions:
Former Needham lawyer sentenced for mortgage fraud
An attorney faces eight months in home confinement, three years of probation and $300,000 in restitution for his part in a scheme to defraud lenders who were funding mortgages for condominium buyers.
Former WA banker gets 10 years for mortgage fraud
In Seattle, a former loan officer was sentenced to 10 years in prison for making false statements in loan applications and to the U.S. Department of Housing and Urban Development, affecting some 150 loans that defaulted and resulting in an estimated loss of more than $10 million to Pierce Commercial Bank.
Radio host charged in $10 million mortgage fraud
In suburban Chicago an attorney and national radio host has been charged in a $10 million scheme to obtain nearly 30 bogus mortgage loans.
But those responsible for crashing the economy to the tune of $12.8 trillion? They remain untouchable. The public wants to know why -- and now so do several U.S. Senators.
Senators Sherrod Brown (D-OH) and Chuck Grassley (R-IA) have written a strongly worded letter to Eric Holder. It deserves to be read in its entirety.
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