Banks, Subprime Lenders To Face Charges

U.S. Attorney Predicts "Dramatic Results" From Sweeping Investigation Into Mortgage Crisis

(AP)  The top federal prosecutor in Los Angeles indicated Thursday that charges will be filed in the coming months in a sweeping investigation of banks and subprime lenders for their role in the nation's mortgage crisis.

"I think we are going to see some fairly dramatic results in the near future," U.S. Attorney Thomas O'Brien told The Associated Press. "There are people who have made many millions of dollars preying on unsuspecting people. That's wrong. That's fraud in a tremendous amount."

A grand jury is investigating at least three mortgage lenders - Countrywide Financial Corp., New Century Financial Corp. and IndyMac Bancorp Inc. Prosecutors are looking at whether mortgage fraud and other white-collar crimes were committed.

O'Brien has just finished his first year overseeing the Central District of California, seven counties that became the heart of the nation's real-estate boom and bust. The area is home to many lending firms, including some which lured homeowners into taking out exotic loans with cheap teaser rates that mushroomed after a set time.

Thirty-four lawyers currently are looking at mortgage fraud and other white-collar crimes, now one of O'Brien's top priorities.

The government is pursuing a "surgical approach" in its investigations and hopes to streamline its prosecutions by seeking indictments with only a few counts, instead of spending several years seeking additional charges.

"We offer them three or four counts," O'Brien said. "We would get the same sentence and we plead them out and we move on to another crook."

O'Brien, 49, said his prosecutors are working closely with the Securities and Exchange Commission as well as other federal agencies in ongoing cases. He recently met with Rosalind Tyson, the SEC's regional director in Los Angeles.

"I said, 'Give me your Top 10 list. Your Top 10 list should probably coordinate pretty closely with mine," O'Brien said. "We sit down and share information we are allowed to share."

Rebecca Lonergan, a former federal prosecutor and a law professor at the University of Southern California, said investigations have shown mortgage fraud to be rampant in the lending business during the housing boom. She recalled one case in which a maid claimed on her loan application that she made $11,000 a month.

These companies "would just sign off on applications no matter how ludicrous the information was," said Lonergan, who worked at the U.S. attorney's office for 18 years.

She said it's unlikely that any alleged misconduct was limited to the lower ranks in the lending institutions.

"Was it just individual loan officers who knew about this?" Lonergan said. "It seems to me unlikely, considering the scope of foreclosures going on right now."

She added, however, that investigators will have a difficult time trying to prove company executives knew what was going on.

Bank of America Corp. bought Countrywide in a deal approved by the lender's shareholders in June. Rick Simon, a Countrywide spokesman, did not immediately return a call seeking comment.

New Century sought Chapter 11 bankruptcy protection in April last year. It had been the nation's second-largest originator of subprime loans.

IndyMac is now being controlled by federal regulators after it failed in July.

[bailmeout1]

The government is pursuing a "surgical approach"

Oh, I am sure it is. lol Do they think we are this stupid? We know Congress is in this up to its ears. You can not hide this.

[jschmidt27]

Who will govern with Obama? Murtha new 6 months before it happened and did nothing. COngress should be indicted for incompetence. http://www.weeklystandard.com/weblogs/TWSFP/2008/10/murthas_freddiefannie_distorti.aspJohn Murtha has taken some pretty stiff criticism for slandering his constituents as racists -- and deservedly so. But it''s worth looking at the rest of his recent interview to get a sense of how he views the credit crunch. Here''s how Murtha describes how we got into this financial mess: "Six months ago they said to me... Paul Kanjorski - who''s on the Banking Committee said ''Fannie Mae and Freddie Mac aren''t going to make it. A hundred banks are going to go bankrupt.'' I said ''well what the hell are we doing about it? What do you mean?'' I could hardly believe that. Finally the president kept saying things are all right. Well the president has no credibility. When he says something nobody believes that. And so finally Bernanke and Paulson came over. Scared the hell out of us. I mean, scared us... made us... convinced us that we had to do something. And of course they sent a 3 pages thing over -- an open door.''It''s amazing that even after all the discussion about this crisis over the last few weeks, Murtha is either so oblivious to current events, or so non-plussed about not telling the truth. In September, 2003, the president proposed a new agency to oversee Fannie and Freddie because they were extended too far.

[jschmidt27]

In September, 2003, the president proposed a new agency to oversee Fannie and Freddie because they were extended too far. In May, 2005, John McCain warned of the threat faced by the two GSEs. There were literally dozens of warnings from the White House. And John Murtha takes so little interest in the issue that the first inkling he had of trouble was when Paul Kanjorski told him 6 months ago? Murtha paints a picture that does not reflect reality. He is either foolish or dishonest--or both.And what of Kanjorski? Murtha says that Kanjorski knew 6 months ago that Fannie Mae and Freddie Mac were going under. That was well before the severity of the problem became fully apparent.Where were Kanjorski''s warnings, and call for an immediate response? There''s nothing on his website to indicate that he warned of the coming trouble. There''s nothing in the Congressional Record from the period. No alarmed letters to the Treasury Secretary. No television interviews where he warned of impending trouble. As far as can be discerned from the public record, Kanjorski saw what was coming and did...nothing.

Of course, Kanjorski had a good reason to avoid being seen as a critic of FNMA and FMAC. But if he knew the trouble that was coming -- as Murtha asserts -- and still did nothing, then Kanjorski has more questions to answer.

[markwg11]

It was incredible that stocks still going up given corporate/ personal bankruptcies, foreclosures, margin calls, unemployments soared to new high. Banks are now more reluctant to lend to companies/ individuals. People completely ignore the US economy is contracted more than it seems (as you see the data today "Philadelphia index down, retail sales down, industrial output down, etc."

[iowacotton]

This is fine and dandy, but what about the republican and democratic politicians who let this this whole mess happen? A shake of the finger and ''Shame on you'' is not much of a deterrent against future underhandedness.

[cinkid56]

This is incredible. They want to prosecute banks and lenders for complying with the Community Reinvestment Act of 1977, a law which said that banks must make loans to people with bad credit?

Stop the madness.

[ragnar30066]

So, after ACORN pressured the banks to give mortgages to people who are HIGH risk, and the government pressured banks the banks to give mortgges to people who are HIGH risk, and the government executives running this show vanished with millions in unearned bonuses resulting cooking the books and the legislators who prevented McCain and others from imposing reforms on these people, they''re going to try to pin all the blame on the hapless banks and put them in jail.

Makes sense. Hitler was able to blame it all on the Jews. Too bad we didn''t believe the Jews and put the Nazis in jail.

Let''s start with Reynes, Johnson, Frank, Dodd, Reid, Pelosi and Obama.

[bailmeout1]

Lets not forget that Obama tried to tack money for Acorn into that very first bail-out bill. "Hey Barry, I know you are on the road and busy and all but we have the biggest bill ever here." Barry multitasking on the phone - "Just get some money in there for Acorn" ---- To us; "I have no involvement with Acorn". Bullspit! Yet he leads in the polls and the media (Supposed to be working for us... Freedom Of The Press and all) just loves him.

[bailmeout1]

It should be;
Freedom Of The Press/Rights Of The Reader

[bailmeout1]

Obamas heath plan includes pre-existing conditions? And no tightening on the borders? Now that the banking industry is in the toilet, I guess the medical industry is next. (probably after the school systems)

[bailmeout1]

Your Acorn tales are getting tiresome. The massive phone "Rob-O-Calls" that are taking place now are illegal in many states. And if Minnie Mouse and Joe Blow show up and are actually allowed to vote, then we have deeper problems than Acorn. Maybe you should begin worrying whether or not your vote will even be truly recorded?
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Posted by sun247 at 01:06 AM : Oct 17, 2008

I know you are tired but the point is not the votes. He claims no involvement with Acorn, yet recently earmarks money for them. That is a lie. Maybe you Democrats accept lying polititions, but I dont. And Republicans also, same thing.

[lmartink]

Good. Now is exactly the time to be rounding up these ripoff artists.

Where''s John Wayne when we need him? Probably smiling in his grave. How about bringing back Clint Eastwood with his big, bad .44?

Hang em high!! Or maybe we should waterboard these jerks and lock them away in Gitmo until their bodies rot.

We should all be this angry.

[cariboubarbi]

No problem for the bankers. They can simply ignore the subpoenas just like Bush and Palin do.

[tmittelstaed]

And if any of you think that you are too smart to
have fallen victim...guess again...you would be no
competition against a true pro.


You are absolutely correct. You practically have to
take classes to understad half of the crud that''''s
placed before you to understand and sign

No, you don''t. Both of you are full of sheit.

Here is what you have to do. You have to take the contract that spells everything out when they give it to you a week in advance of signing. You have to spend 2 to 3 evenings carefully reading it, and using the web or library to research things you find to be unclear. (which there isn''t much, unless your education stopped in the 4th grade) You have to call your banker, agent, and loan officer with intelligent questions. Then you have to read things again.

The process takes roughly 40 hours for a complete newbie to home buying, which spread over a week''s time is not difficult at all. You should take paid vacation time from your job to do it. And, it is an -extremely small- amount of time to ask someone to spend on a purchase they will be spending the next 30 years paying for.

People like you two are the problem with this country, your hyperactive demands to be able to get everything in your life done in 15 minutes are a direct result of being raised on a diet of too much television.

[smurfcrusher]

"Your Acorn tales are getting tiresome. The massive phone "Rob-O-Calls" that are taking place now are illegal in many states. And if Minnie Mouse and Joe Blow show up and are actually allowed to vote, then we have deeper problems than Acorn. Maybe you should begin worrying whether or not your vote will even be truly recorded?"

if ACORN is so terrible, why was McCain keynote speaker for them in 2006?

Wait, maybe it IS terrible.

[smurfcrusher]

Republicans are just so angry these days.

What could justify such a negative attitude?

[bailmeout1]

Obamas heath plan includes pre-existing conditions? And no tightening on the borders? Now that the banking industry is in the toilet, I guess the medical industry is next. (probably after the school systems)

Posted by bailmeout1 at 01:07 AM : Oct 17, 2008

Nope...too late! Bush already got to the school system...remember? "No Child Left Behind"...yeah, right, where does the USA rank internationally right now? Are we still 26th?
--------------------------------------------------------------------------------
Posted by sun247 at 02:12 AM : Oct 17, 2008

Common theme? Too much government.

[bailmeout1]

if ACORN is so terrible, why was McCain keynote speaker for them in 2006?

Wait, maybe it IS terrible.
--------------------------------------------------------------------------------
Posted by smurfcrusher at 07:37 AM : Oct 17, 2008

So McCain backed them when no one knew they were crooks, and doesn''t anymore. WTH is wrong with that? Compared to Obama training them, lawyering for them, upfront giving them money and under-the-table giving them money and earmarking them money - and then denying it. Oh, thats equal - sure.

[bailmeout1]

I know you are tired but the point is not the votes. He claims no involvement with Acorn, yet recently earmarks money for them. That is a lie. Maybe you Democrats accept lying polititions, but I dont. And Republicans also, same thing.

Posted by bailmeout1 at 01:10 AM : Oct 17, 2008

There you go again...ASSuming! I am not a Democrat. I am not a Republican. I quit the Republican party in 1996, and have been a registered Independent ever since. I don''''t recall ever voting a straight ticket. See how easy it is to miss FACTS! Please do your homework before claiming to know the facts?
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Posted by sun247 at 01:15 AM : Oct 17, 2008

There you go again - diverting the question. Not one word in your response as to Obama lying.
Who cares if you are an Independent or whatever? Who cares if I got that right or wrong? Pointless drivel...

[bailmeout1]

Nancy Pelosis'' Democrat Congress has done literally nothing in two years. This is how the Democrats work. They wanted things this way during this election. The Democrats are happy the country is in the state that it is. And all the sheep are falling for it. Somehow, beginning with LBJ, this has become a party of just outright liars and partsanship. And if not that (Carter) then outright ineptitude.

Sure you find lies and such with Republicans, but it is not the air that they breath to the extent as the Democrats. It is "in" them.

[terrapin78]

The McBu$h campaign has been one big lie from the outset.

Personally, I am sick of McSame''s advertising. I live in Colorado and I hear one lie after another from McCorpse.

[agidoi]

i agree with bailmeout1 lbj is the one that ruin your s/s took it out of a private account and put in the general account cuase they wanted to get the money that was in there

[runningralph]

The Community Reinvestment Act was passed in the Carter administration. This act encouraged banks to abandon their conservative principles. Liberal lending became the norm. This led to collapse as liberal policies always do. Liberal policies have led to decline or collapse in marriage, public schools, business, and now the banking business. Liberalism goes against natural evolution by insuring survival of the unfittest.

[agidoi]

i agree with you on that one

[bailmeout1]

The McBu$h campaign has been one big lie from the outset.

Personally, I am sick of McSame''''s advertising. I live in Colorado and I hear one lie after another from McCorpse.
--------------------------------------------------------------------------------
Posted by Terrapin78 at 09:58 AM : Oct 17, 2008

Are you like 12 or something?

[cbsfan732]

Republicans are just so angry these days.

What could justify such a negative attitude?


--------------------------------------------------------------------------------

Posted by smurfcrusher

Maybe because they understand what this country is really facing, especially if obama is their leader.
Maybe they''re pissed because their party leaders turned against them and stuck mccain on their ticket.
Maybe they are just sick, nauseated, knowing that these people that support obama and who will vote him in as president, are just as blind as the people who were convinced they could afford a mortgage, when they couldn''t.
Maybe I''m giving republicans too much credit. Maybe you are all blind to the collapse of America that is happening before your eyes. Or maybe obama will bring security to this nation for about three and a half years before he reveals who he truly is. We live in exciting times, don''t we?

[bailmeout1]

Or maybe obama will bring security to this nation for about three and a half years before he reveals who he truly is. We live in exciting times, don''''t we?
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Posted by cbsfan732 at 10:22 AM : Oct 17, 2008
He will not wait. there is too much "glee" over there. The good thing is, at least all of the Post Offices have been renamed and Obama will not have to worry about that.

[questionnews]

4 years ago when the wife & I went looking to buy our home, Countrywide qualified us for a $250,000 mortgage. After creating an Excel spreadsheet to see exactly how our finances would play out if we bought a $250,000 house and the math didn''t work out. Based on all our other expenses, it became quite clear that we could only afford a house in the $150,000 to $175.00 and that''s what we bought. It ain''t no mansion, but its a nice home and we can afford it. So many people were qualified for mortgages that they could not realistically pay for, but since the bank said you can get "this much?? for a home loan, people went for that maximum without running the numbers.
Sorry, those people were stupid and deserve to lose the home they could not afford.

[mypatch]

You are all crazy. Mr. O brian is speaking about the crooks that did not follow the law. I for one can attest to the fact that a mortgage lender tried to push a subprime mortgage on me years ago and if I hadn''t been in real estate, (borrowing and selling previously) I may have fallen for their dishonest tactics. And stop with the party affiliations. Both parties SUCK.

[bailmeout1]

4 years ago when the wife & I went looking to buy our home, Countrywide qualified us for a $250,000 mortgage. After creating an Excel spreadsheet to see exactly how our finances would play out if we bought a $250,000 house and the math didn''''t work out. Based on all our other expenses, it became quite clear that we could only afford a house in the $150,000 to $175.00 and that''''s what we bought. It ain''''t no mansion, but its a nice home and we can afford it. So many people were qualified for mortgages that they could not realistically pay for, but since the bank said you can get "this much?? for a home loan, people went for that maximum without running the numbers.
Sorry, those people were stupid and deserve to lose the home they could not afford.
--------------------------------------------------------------------------------
Posted by Questionnews at 10:38 AM : Oct 17, 2008

There were also plenty of cases where $400,000 was loaned on a $300,000 house and $300,000 on a $200,000 house and a lot of money (real money) was handed over at closing. And we are supposed to reward this? And not get the crooks responsible? Both democrat and republican....

[bailmeout1]

It is the Republicans fault. They had six years to control immigration. Now we have Acorn gathering up the vote, Obama promising a check even if you did not even live here last year. Now we have insurance with no regard for pre-existing conditions, so anyone from anywhere can come here with cancer or 8 months pregnant and we have to pay for it. And the sheep follow....

[bailmeout1]

And friggin of course California wants to go blue. You Southwestern undecided states better wake up.

[lochlan-2009]

"Banks, Subprime Lenders To Face Charges"

Don''t forget the representatives who changed the laws to make their fraud legal.

[bailmeout1]

I guarantee that six months after Obama is in our hospitals are filled to capacity and emergency rooms too you will need to speak Spanish. News Flash - Spain did not colonize this country!

[bailmeout1]

I remember when I was A teenager. I worked in the summers and at night and all. Just pocket money for me and my GF. I made more than I spent though and saved up a bit. At one point I didnt have a job and just partied with my GF, we went everywhere and did everything - until the money ran out. I went over to unemployment figuring I could get a check and use it for gas money and get a job - any job. This was in completely liberal NJ. Well they proceded to (without any questions) print me out 29 individual weekly checks. I think it was like 8 grand or something. I was in shock, I even asked the woman to check it was ok. She said it was accumlulated and that I even qualified for something called Extended Benefits. There was no checking it out with the manager or anything. Of course I kept it and spent it partying more with my GF. haha Now in NJ, they did change some things to limit that, but that is just an idea on what happens in these Government Help-All schemes.

[tejasdemo]

Posted by bailmeout1 at 11:34 AM : Oct 17, 2008

Typical Republican BS. Rips the govt off ( because he can ). Then turns around and tries to blame somebody else for it.

I love dogs. A dog will knock over the garbage can in the kitchen--sit down--tuck it''s tail and beg for forgiveness.

Cats ? ( Republicans )...they will knock that same can over and look at you like you did it.

[bailmeout1]

Posted by tejasdemo at 11:40 AM : Oct 17, 2008

You are an idiot, typical of the hate from the left. It is impossible for a teenager to rip off the government. It was a statement of fact and I have given much back in return. Moron.

[observantx]

Pressing charges on these crooks and getting guilty verdicts won''t do anyhting if all it results in is a slap on the wrist fine.

There needs to be real jail time, not Club Fed. There need to be REAL fines and revocations of licenses.

MAKE IT STICK AND MAKE IT HURT.

That''s the only way anything will change.

And when we get these guys where they belong, we need to apply the same regimen to the effing lobbyists and Congressmen that threw away all the regulations and safeguards that made this clusterfvck possible.

[tekzero2u]

Typical Republican BS. Rips the govt off ( because he can ). Then turns around and tries to blame somebody else for it.

I love dogs. A dog will knock over the garbage can in the kitchen--sit down--tuck it''''s tail and beg for forgiveness.

Cats ? ( Republicans )...they will knock that same can over and look at you like you did it.
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Posted by tejasdemo at 11:40 AM : Oct 17, 2008

He did nothing wrong. Did not rip off anyone and broke no laws. Similar happened to me but I didnt even ask to make sure as he did. We all learn to see a bigger picture as we age and mature - maybe that will happen for you also.

[bailmeout1]

Plus, as we age we become more conservative. Back then I was a Democrat. hehehe

[beerman05200]

If any banking executive serves a single day in prison, I will sprout wings and fly. Millions for the robber barons, but no justice for the American taxpayer.

[bailmeout1]

If any banking executive serves a single day in prison, I will sprout wings and fly. Millions for the robber barons, but no justice for the American taxpayer.
--------------------------------------------------------------------------------
Posted by Beerman05200 at 12:20 PM : Oct 17, 2008
I am sure that the banking executives have it set up that they only broke "ethics" rules. You are right. None will do jail time. None will give any money back. This is a diversion, designed to funnel our anger and frustration towards "getting them evil bankers" - and away from Congress.

[far_point200]

Hmmm.... Will Congressional financial oversight committee chairmen Barney F(ag), Schulman & Dobb be charged with negligence?

How about charging J. Carter, B. Clinton and all the Congressmen who voted and modified the Community Reinvestment Act?

How about charging the heads of Treasury, SEC, FDIC and the FED for the last 30 years.

And don''t forget the heads of State Banking and Insurance Departments, especially the ones in New York.

Business people aren''t the only ones that need their arses spanked!

[bm6005]

Sure you find lies and such with Republicans, but it is not the air that they breath to the extent as the Democrats. It is "in" them.
Posted by bailmeout

Yea, yea, yea. I know the poor repubs are so misunderstood. NOT!! First off both parties suck. Second, when it comes to money for them but not for others the repubs are at the front of the line. You seem to think that the dems are completely at fault. Take a look at where the repub congrees''s complete support for Boosh got the country. They spent like a GD drunken sailor. Open your eyes FOOL!!!

[bm6005]

You realize the Democrats appeal to the crowd that DEPENDS on government, don''''t you?........
Posted by corey2444

What a crock of s.hit! I''m independent now but I was a dem earlier in life. I NEVER expected anything from the gov''t. I worked hard, saved money and did well for myself. There are more white trash republicans on welfare than there are any other race of people. And they are a separate race, believe me.

[rational_1]

I''m perfectly willing for us to fork over another billion or two (at this point what''s another drop in the bucket?) to fund extensive investigations and the construction of new prisons to hold these miscreants. We''ve already blown the better part of a trillion dollars so we might as well get something constructive out of our money (like ruining the lives of the f*cks responsible for this debacle).

[c-mo6]

I remember when I was A teenager. I worked in the summers and at night and all. Just pocket money for me and my GF. I made more than I spent though and saved up a bit. At one point I didnt have a job and just partied with my GF, we went everywhere and did everything - until the money ran out. I went over to unemployment figuring I could get a check and use it for gas money and get a job - any job. This was in completely liberal NJ. Well they proceded to (without any questions) print me out 29 individual weekly checks. I think it was like 8 grand or something. I was in shock, I even asked the woman to check it was ok. She said it was accumlulated and that I even qualified for something called Extended Benefits. There was no checking it out with the manager or anything. Of course I kept it and spent it partying more with my GF. haha Now in NJ, they did change some things to limit that, but that is just an idea on what happens in these Government Help-All schemes.


--------------------------------------------------------------------------------

Posted by bailmeout1 at 11:34 AM : Oct 17, 2008
+ report abuse
just because you took advantage of it doesnt mean that there aren''t people who have lost their jobs after 20years of service and might really need that help til they get back on their feet.

[tngreen]

When poor people get a handout, it''s because they''re lazy. When rich people get a handout, it''s because they made "honest mistakes" and we have to help them in order to keep our country from devolving into the Stone Age.

Shock and awe. Divide and conquer. It works!

You pathetic saps.

[nurse70-2009]

THE GOVENMENT SHOULD SEEK JUSTICE FOR ALL OF US TAXPAYORS WHO ARE NOW STUCK WITH AN ENORMOUS BILL WE CAN NEVER PAY . BUT THEY SHOULD ALSO MAKE THESE COMPANY''S THAT TRICKED PEOPLE INTO SUBPRIME LOANS AND VARIABLE RATES TO GO BACK, REFINANCE AND SET UP A FIXED RATE !!! THAT WOULD STOP THE CRISIS AND SAVE PEOPLE FROM BEING HOMELESS!! THIS WOULD BE THE ONLY JUSTIC FOR THE AMERICAN TAXPAYOR. STOP COUNTRYWIDE,CENTEX,NATIONSTAR,ETC THEY ARE ARE BUNCH OF CROOKS STILL *UCKING HOMEOWNERS!!!! HOMEOWNERSHIP SHOULD NOT BE AN ELITIST AMERICAN DREAM .

[payasyougo]

"The top federal prosecutor in Los Angeles indicated Thursday that charges will be filed in the coming months in a sweeping investigation of banks and subprime lenders for their role in the nation''s mortgage crisis."
----

As long as our government can keep you angry and pointed at someone else, you''ll never see that your government is the problem, not the solution. Vilify the rich because it continues to be an effective diversionary tactic.