The Holder Justice Department also declined to prosecute anyone at GE Capital, much to the astonishment of SEC investigators who had not only identified multiple instances of investor fraud but had identified specific individuals in the accounting department who had compiled and released the fraudulent information.
A Class Act
Journalist Michael Hudson compiled evidence of additional misdeeds regarding subprime mortgages at GE Capital. Its CEO, Jeffrey Immelt, lavished praise on an executive whose company he bought with a fortune in shareholder money.
What was that company? As Hudson notes, it "was a place where erstwhile shoe salesmen, ex-strippers and even a former porn actress could sign on as sales reps and make big money pushing home loans. WMC's top salespeople earned a million dollars a year or more and lived fast, swigging $1,000 bottles of Cristal and wheeling around in $100,000 Ferraris and Bentleys."
And when an investigator tried to put the brakes on fraudulent activity in that operation, Immelt's GE Capital sidelined him so that the party could continue. Not only was the firm spared any indictments, but the Treasury Department and Federal Reserve bent the rules so that it could be bailed out!
Not that its executives escaped punishment altogether. Immelt was sentenced to attend multiple public meetings -- as the head of the President's Economic Advisory Panel. (They even renamed the group when Immelt took over, calling it a "Jobs and Competitiveness Panel." That might have been a bit of mordant humor on someone's part, given Immelt's record of outsourcing American jobs overseas.)
What about that $25 billion foreclosure fraud settlement, which paid out less than $2,000 to people who had lost their homes through illegal foreclosure? We gave that deal a failing grade on all five criteria we'd defined for scoring the agreement: openness, justice, restitution, deterrence, and reconciliation. But we thought there was a possibility that some its provisions could be used to restore some measure of justice -- especially if it led to criminal indictments.
And as we suspected and feared, the penalties and restitution won't even amount to $25 billion. Banks are being "credited" for actions they were already taking before the settlement came along (shades of "Blind Trust").
Among the crimes involved in that settlement: Forgery and perjury, in the mass filing of notarized documents which falsely state that the person signing the document has seen and reviewed all the documents which prove that the bank is entitled to foreclose on a property. (That's what they call "robo-signing" -- since a false notarized document is a form of perjury, a better name would be "robo-crime.")
Robo-signing is one of many forms of bank lawbreaking which turned into a crime wave in recent years. And while the banks have promised to stop, Wells Fargo -- one of the banks who signed the deal -- illegally foreclosed on the same house last week for the second time. And they hired a firm to do it that was so sleazy its employees apparently vandalized and robbed the property when they raided it a second time.
How did they get permission to foreclose on this home, which the owners owned outright and which had no mortgage, unless they filed false documents twice stating that they had the proper documentation in hand to seize it?
The Big Sting
Then there's the enormous area of investor fraud, in which these banks bundled and sold mortgages to investors -- including many pension plans and public institutions -- which they knew were likely to fail. In fact, the entire "liar's loan" industry was built around writing bad mortgages and then defrauding investors into buying them.
It's like The Sting, multiplied a millionfold and unleashed on the entire country. (And considerably less photogenic leading actors. Blankfein and Immelt may be shrewd operators, but Redford and Newman they ain't.)