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View Diary: Closely-Watched Court Decision Breaks Bad for Wall St. Has A Day of Reckoning Arrived? (154 comments)

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  •  The scanario I'm considering at present goes (15+ / 0-)

    something like this,
    In the eighties, the Savings and Loan industry looked the other way as individuals flipped parcels of raw land and subdivisions by selling them back and forth to each other and, eventually, take out a loan for the inflated amount their flipping had achieved. They got caught, some institutions went bust because they had lent money to people who had no intention to repay and, even if something got built on the land, the inflated value of the land couldn't be recouped.
    The variation this time seems to be that "disinterested" parties were inserted into the process of inflating values. We're calling them "subprime" borrowers because they didn't start out with assets or income expectations that could reasonably be expected to pay off what they were borrowing.
    But, that didn't matter because, as in the S&L flipping, the object was to extract money from the financial institutions. Period. The deal makers promoted straw buyers who weren't looking for housing; they were looking to participate in a "deal." The object of the deals was to fleece the banks with the assistance of people almost picked up in the street. Try to find them now and they've disappeared.

    There's an outfit in Georgia, McCalla-Raymer, LLC that first got the legislature to lift requirements and amend procedures to expedite foreclosures for banks and mortgage companies. Then they branched out and set up an enterprise they named Prommis Solutions, LLC to help financial institutions process foreclosures and defaults. The fraud is going to be hard to prove at the origination stage, I suspect, because the whole thing was rigged to fail and simply generate on-going revenue via fees. It's like the credit card industry counting on customers defaulting and owing more and more in fees.
    American enterprise has long been motivated by two objectives: monopoly conditions and recurring revenues. The law lets them do both. It's legal crime.

    We organize governments to deliver services and prevent abuse.

    by hannah on Wed Feb 06, 2013 at 05:42:02 AM PST

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