Government won’t prosecute big bank execs in mortgage-bond fraud – report

by Ryan Smith04 Mar 2016
No Citigroup executives or employees will face criminal charges over the packaging and selling of faulty mortgage bonds during the run-up to the financial meltdown, according to a Reuters report.

The decision not to pursue criminal charges was made in the wake of Citigroup’s $7 billion settlement resolving state and federal claims related to faulty mortgage-backed securities. Reuters uncovered the decision in a November report obtained by the news agency through the Freedom of Information Act.

The report’s release marks the first public acknowledgement by authorities that big bank executives would not face criminal prosecution for their role in the financial crisis, according to Reuters.

According to the report, authored by the Federal Housing Finance Agency’s Office of the Inspector General, prosecutors investigated whether any individual Citibank executives should be charged, but determined that “there was not enough compelling evidence” – even though the report also stated that “the totality of the evidence and testimony obtained showed that Citigroup knowingly and purposefully purchased and securitized loans that did not meet representation and warranties or in many cases were outright fraudulent loans.”

The government has weathered years of intense criticism over its failure to criminally prosecute big bank executives who played a role in the 2008 mortgage meltdown.
 

COMMENTS

  • by Pete F | 3/4/2016 2:44:39 PM

    I guess this all just happened by accident. I f top executives bear no responsibility for peddling fraudulent mortgages, why did they get huge bonuses when things improved?
    Only responsible for good outcomes, not bad?

  • by Anonymous | 3/4/2016 2:56:48 PM

    Ironically, farther down the food chain, all of those parties on those identical mortgages probably battled it out with lawyers and the feds to see who would serve jail time and/or pay fines. The borrowers, mortgage officers, mortgage companies who employed the mortgage officers, title agents, title companies who employed them, realtors, etc. All of these parties probably spent tens upon tens of thousands of dollars in legal fees and fines, and some of them are serving time. Yet, because these big bank execs have deeper pockets, they are immune from prosecution for committing fraud or breaking rules using the identical mortgages for their post-closing schemes. It isn't right or fair in any way. Break these darned banks up. Why are they still allowed to walk all over us like this?

  • by Steve Bernstein | 3/4/2016 3:05:04 PM

    So it's ok to commit fraud and bring down the global economy for a decade, but if a laymen uses profanity in public, or a homeless person steals a loaf of bread or brick of cheese, off to jail they go. Sounds fair to me, #Trump2016.

Poll

Is TILA-RESPA a good or bad thing long term?