Timothy Geithner's new plan, like all his other plans, seems designed to shovel billions into the coffers of the very same bankers who got rich on the mortgage bubble. When the public gets a glimpse of the tip of this giant iceberg, as they did with the AIG bonuses, they're dismissed as angry rubes who Just Don't Understand How Things Work. But his latest scheme is proof that they are absolutely right.
Despite Geithner"s contention that banks are simply "burdened with bad lending decisions," most Americans understand at this point that there was serious fraud involved in the inflation of the mortgage bubble. The Justice Department and the FBI are currently investigating Countrywide for accounting fraud, insider trading and consciously lending money to people they knew couldn't afford to repay it. Meanwhile, AIG is suing Countrywide because they have to pay off hundreds of millions of dollars in insurance claims because Countrywide just flat out lied about the mortgages they were issuing:
United Guaranty said in the complaint that it had reviewed loan files that showed that most mortgages covered by 11 policies for asset-backed securities were either underwritten in violation of Countrywide's own guidelines or contained defects, such as missing documents, misrepresented credit scores or false social security numbers.
And who has the privilege of paying off AIG's insurance policies? That would be American taxpayers.
Stanford Kurland was the President of Countrywide during its salad days, when the predatory lending practice of low introductory "teasers" inflated Countrywide's mortgage portfolio from $62 billion to $463 billion. Bank of America, which bought Countrywide last year, has already paid out $8.7 billion to settle suits brought by states because of Countrywide's fraudulent practices, including hidden fees and false claims like "no closing costs." The Illinois suit examined one mortgage broker's sales of Countrywide loans and found the "vast majority of the loans had inflated income, almost all without the borrower's knowledge."
Just like any Ponzi scheme, the first ones out get rich. And Stanford Kurland got rich on Countrywide, cashing out to the tune of $200 million.
So where is Kurland today? Is he in jail? Well, no. He's going to get rich out of Timothy Geithner's new scheme. From the New York Times:
[A] dozen former top Countrywide executives now stand to make millions from the home mortgage mess.
Stanford L. Kurland, Countrywide's former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
"It has been very successful -- very strong," John Lawrence, the company's head of loan servicing, told Mr. Kurland one recent morning in a glass-walled boardroom here at PennyMac's spacious headquarters, opened last year in the same Los Angeles suburb where Countrywide once flourished.
"In fact, it's off-the-charts good," he told Mr. Kurland, who was leaning back comfortably in his leather boardroom chair, even as the financial markets in New York were plunging.
Stanford Kurland and the Countrywide Crew have never been held to account for their part creating this financial crisis, and now Geithner's plan makes them rich all over again. Geithner worked hard to cut out provisions in the Senate stimulus bill that would have limited millions in AIG bonuses, and how he"s refusing to endorse Congressional plans to tax them. He seems to believe that there is an elite class of bankers in this country who must make money no matter what happens, who should never be held to account, and whose interests should always come first in any plan the government devises.
Do you get a chance to make money in this "off-the-charts good" investing opportunity? Noooo, these loans that nobody has to pay back aren't being offered to the public.
The public understands what's going on all too well. The same thieves who brought us the mortgage crisis are above the law and back again to pick our pockets again in broad daylight, thanks to the tireless efforts of Timothy Geithner on their behalf.
Jane Hamsher blogs at firedoglake