In the past, a bank representative or attorney for the bank would walk into court, point out that the "deadbeat homeowners" weren't paying their mortgage and the family would get kicked out. But that may have finally changed.
It is clear now that the banks have got to take the whole lot of toxic waste securities back. Trillions of dollars worth. The banks are toast. There is no cooking of the books that will turn this blackened toast back to bread.
If control fraud were rare then the proposed financial incentives for whistleblowers would be more dubious. But the current epidemic of accounting control frauds has caused massively greater damage than did their S&L counterparts.
Inducing endemic appraisal fraud is an optimal strategy for a lender that is engaged in "accounting control fraud." Accounting control frauds drove the second phase of the S&L debacle, the Enron era crisis, and the ongoing crisis.
Financing has become a robotic form of mass production, designed to generate ever-increasing wealth within an artificial system by draining it from the real world. In a word, banks have lost their souls.
Washington failed to act the first time around -- when lenders were engaged in a frenzy of predatory lending. The foreclosure scandal is a second chance for lawmakers to prove they can ferret out the truth.
It turns out, toddlers who tell lies do better as adults. Whether this is surprising news about child development, or a sad statement about the kind of society we live in depends on how you define "better."