Center for Public Integrity names 25 lenders blamed for financial crisis

[depakid]

Source: Sydney Morning Herald

US and foreign banks were not unwitting victims of circumstance but deliberately culpable in the financial meltdown that engulfed the United States last year, a campaign group said Wednesday. The Center for Public Integrity named 25 "subprime" mortgage companies whose risky lending was blamed for the US property market collapse and the subsequent global economic crisis.

Many of the lenders were either controlled by US and European banks, or could not have indulged in their high-risk lending spree without the connivance of banks, the investigative journalism group said in a new study. "The mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves," the center's executive director Bill Buzenberg said.

"These banks were deliberate enablers that bankrolled the type of lending that's now threatening the financial system," he said.

The study was released as the US House of Representatives was set Wednesday to vote on a Senate-approved bill that would set up a 9/11-style inquiry into the root causes of the financial crisis... "The banks made huge profits while their executives collected handsome bonuses until the bottom fell out of the real estate market."

Read more: http://news.smh.com.au/breaking-news-world/us-center-na...

---

The Center for Public Integrity sets out its findings here:

http://www.publicintegrity.org/blog/entry/1354/

[Uncle Joe]

1. Kicked and recommended.

Thanks for the thread, depakid.

[mbperrin]

2. They should be hanged.

Instead, we're paying them off to do more!

[lsewpershad]

4. May not hanged

but at least brought to trial.

[mbperrin]

6. Gosh, I feel like we're going through a trial now.

But yes, a fast fair trial, and then a hanging, using the same standards of evidence that they use to take action on my cards and loans.

[ooglymoogly]

26. Nope, we are not allowed to look at the past as far as big shots are concerned

we can only look forward as long as we are not looking forward into the banksters or the war criminals. Welcome to a brave new world.

[L0oniX]

12. Torture them first then hang them

[pleah]

3. K&R

[BelgianMadCow]

5. Critical info - to counter extensive rewriting of history regarding who started what size of crash

bookmarked & recommended

[The Sushi Bandit]

7. So where is the complete list??

[xxqqqzme]

17. Here are a few more

* Nine of the top 10 lenders were based in California, including all of the top five — Countrywide Financial Corp., Ameriquest Mortgage Co., New Century Financial Corp., First Franklin Corp., and Long Beach Mortgage Co.

* Twenty of the top 25 subprime lenders have closed, stopped lending, or been sold to avoid bankruptcy. Most were non-bank lenders.

* Eleven of the lenders on the list, including four recipients of bank bailout funds, have made payments to settle claims of widespread lending abuses.

http://www.publicintegrity.org/investigations/economic_...

[Jefferson23]

8. K&R, and bookmarked, thanks for posting.

[Hotler]

9. Kicking! They're stealing your f*#king money people.

Bailouts no! Prison yes!

[saigon68]

10. Criminal White Collar Thugs and Hoodlums living large

[L0oniX]

11. Banksters

[valerief]

19. LOL! Excellent!

[Wednesdays]

13. A 9/11-style inquiry?

Now, that's reassuring.

[frylock]

29. no shoot

[frylock]

30. no shoot

[Wednesdays]

14. K&R

[chill_wind]

15. And lets be clear about who got the bulk of those subprime loans-- and it wasn't poor folk

with mortgages. In fact homeowners with mortgages were only a small part of the collapse. It was far greater Commercial & wealthier investors & risk takers. Speculators.
See this Consumer Finance study that began around the same time frame (2005)

Newswise — Homeowners who are struggling with mortgages for their own residences are a relatively small part of the overall mortgage crisis, according to results of a new nationwide study of consumer balance sheets.

The study estimates that losses on first mortgages for owner-occupied homes may range as high as $180 billion.

While that’s a large amount, it is not catastrophic, said Randall Olsen, co-author of the study, professor of economics, and director of the Center for Human Resource Research at Ohio State University.

Instead, the results suggest that the biggest losses in the mortgage crisis are not for owner-occupied homes, but for commercial real estate loans, and loans for houses bought as investments or built on speculation, Olsen said.

more at the link- http://www.newswise.com/articles/view/544741 /

more at this journal entry I had back in the fall during the great bailout scam:

http://www.democraticunderground.com/discuss/duboard.ph...

from then:

"P.S. While googling yesterday, I discovered that some of our Congress reps had actually been given this Olsen study during the bailout deliberations, and a couple who were considering switching votes were asked to comment, but declined."

[jazzjunkysue]

25. It's the speculation. I wish Obama would pass a moritorium on new building.

No more until we reach a tipping point with existing real estate.

All of florida is for sale. It's absolutely disgusting. All of the old properties sit and rot because there's so much new product available.

Let's bring back St. Petersberg to it's former status before we start one more complex.
Same with California.

Capitalism failed miserably. </rant>

[No Elephants]

16. Banks? And here I thought it was my neighbor with the extra bathroom. Isn't that what

Santelli of CNBC said? I mean, he should know, right?

Financial institutions caused financial collapse, not my neighbor. Gee, who coulda figured out that one? Not even the financial whizzes at CNBC. But, Countrywide is Number 1? Not AIG?

In a related story, all those on public integrity's list that have not already done so are filing change of name papers as I type. Unless they are truly out of busiiness, of course.

See. I know Michael Douglas's character in Wall Street was wrong. Greed is not good.

[valerief]

18. We knew. Gramm-Leach-Bliley. nt

[Overseas]

20. K&R -- thanks to Australian news for reporting this. //nt

[Dumak]

21. Remarkable that there was not one honest person in all these banks

that would come forward and tell us what was going on. Apparently it is a job requirement of these execs to look the other way when you see something highly unethical/illegal going on. When business execs must be able to take advantage of legal loopholes and not be concerned with ethics, what kind of people are they? 'Sociopath' is a word that comes to mind. Are these people like that from day 1 in college business class, or does the transformation take place later on? Perhaps you have to be like that in order to get promoted to management? Is that what the high salaries are for - compensation for the risk of going to prison?

[happydreams]

27. Excellent observation. The next time you see a bank executive...

oh, well....

[dixiegrrrrl]

22. I will belive a Congressional Inquiry *ONLY* if ....

People and Orgs. like Public Integrity are sitting at the witness table.

I hve been watching Congressional Heatings for 3 years now, including the infamous one this week with Bachus, and have noticed an applaing absence of non-coporate, pro-people representation in the hearings.

[ieoeja]

23. And notably absent ... Freddie and Fannie

Because ... contrary to the current Rightist meme, Freddie and Fannie were not making risky loans to low-income buyers. Freddie and Fannie have never given out a risky mortgage in their existence for the simple reason that Freddie and Fannie do not give out mortgages. They buy them from the banks that did give them out.

Following is the Subprime 25 cited as the cause of the credit crisis.


Source: http://www.publicintegrity.org/investigations/economic_... /

1. Countrywide Financial Corp.
Amount of Subprime Loans: At least $97.2 billion

2. Ameriquest Mortgage Co./ACC Capital Holdings Corp.
Amount of Subprime Loans: At least $80.6 billion

3. New Century Financial Corp.
Amount of Subprime Loans: At least $75.9 billion

4. First Franklin Corp./National City Corp./Merrill Lynch & Co.
Amount of Subprime Loans: At least $68 billion

5. Long Beach Mortgage Co./Washington Mutual
Amount of Subprime Loans: At least $65.2 billion

6. Option One Mortgage Corp./H&R Block Inc.
Amount of Subprime Loans: At least $64.7 billion

7. Fremont Investment & Loan/Fremont General Corp.
Amount of Subprime Loans: At least $61.7 billion

8. Wells Fargo Financial/Wells Fargo & Co.
Amount of Subprime Loans: At least $51.8 billion

9. HSBC Finance Corp./HSBC Holdings plc
Amount of Subprime Loans: At least $50.3 billion ***

10. WMC Mortgage Corp./General Electric Co.
Amount of Subprime Loans: At least $49.6 billion

11. BNC Mortgage Inc./Lehman Brothers
Amount of Subprime Loans: At least $47.6 billion ***

12. Chase Home Finance/JPMorgan Chase & Co.
Amount of Subprime Loans: At least $30 billion

13. Accredited Home Lenders Inc./Lone Star Funds V
Amount of Subprime Loans: At least $29.0 billion

14. IndyMac Bancorp, Inc.
Amount of Subprime Loans: At least $26.4 billion

15. CitiFinancial / Citigroup Inc.
Amount of Subprime Loans: At least $26.3 billion

16. EquiFirst Corp./Regions Financial Corp./Barclays Bank plc
Amount of Subprime Loans: At least $24.4 billion

17. Encore Credit Corp./ ECC Capital Corp./Bear Stearns Cos. Inc.
Amount of Subprime Loans: At least $22.3 billion

18. American General Finance Inc./American International Group Inc. (AIG)
Amount of Subprime Loans: At least $21.8 billion ***

19. Wachovia Corp.
Amount of Subprime Loans: At least $17.6 billion.

20. GMAC LLC/Cerberus Capital Management
Amount of Subprime Loans: At least $17.2 billion ***

21. NovaStar Financial Inc.
Amount of Subprime Loans: At least $16 billion

22. American Home Mortgage Investment Corp.
Amount of Subprime Loans: At least $15.3 billion

23.GreenPoint Mortgage Funding Inc./Capital One Financial Corp.
Amount of Subprime Loans: At least $13.1 billion

24. ResMAE Mortgage Corp./Citadel Investment Group
Amount of Subprime Loans: At least $13 billion

25. Aegis Mortgage Corp./Cerberus Capital Management
Amount of Subprime Loans: At least $11.5 billion

[chill_wind]

32. Unfortunately, they DO also finger Freddie and Fannie

and predictably work their way on to the whole predatory lending thing to poor, the uninformed, the minorities. (see passages below) where they carefully couch predatory in quotes. They just do it in a separate article in the series.

Again, I go back to the Olsen Study and the role of home owner occupied mortgages overall in the scheme of the big meltdown. Where is the larger discussion about commercial and other greedier speculators, wherein home mortgage owners of low or modest income constituted only a small fraction of the real global meltdown?

In addition to Wall Street, the Federal National Mortgage Corporation (Fannie Mae) and the Federal Home Mortgage Corporation (Freddie Mac) also fed the subprime monster. Fannie and Freddie were created by the government to promote home ownership by buying mortgages from lenders and selling them to investors, thus freeing up cash for banks to make more loans.

With investment banks buying more and more loans themselves each year, Freddie and Fannie began buying a huge volume of mortgage-backed securities from Wall Street as a means to foster affordable housing goals.

As of the end of February 2009, Fannie and Freddie held a combined $292.1 billion in private mortgage-backed securities in their portfolios, according to monthly statements from both companies. On September 7, 2008, the government took control of the two entities.
Abusive Lending

The subprime lending business has had its share of public relations problems. Subprime lenders say they serve an important function — offering credit to people who have been snubbed by traditional mortgage lenders. But regulators and consumer advocates say some are “predatory” lenders who take advantage of people with little knowledge of how the financial system works and few options when it comes to borrowing.



(much more snipped out)

Ameriquest was the subject of at least four settlements involving predatory lending since 1996, including charges of excessive fees and misleading poor and minority borrowers. In 2006, Ameriquest and its holding company, ACC Capital Holdings Corp., agreed to a $325 million settlement with the District of Columbia and 49 states over allegations that the company misled borrowers, falsified documents, and pressured appraisers to inflate home values.

more: http://www.publicintegrity.org/investigations/economic_...

[unc70]

24. Most of these not really "banks" -- big part of problem

While several of these lenders were bought by banks, almost none were operating as banks and subject to bank regulation. That is also the case with many of the Wall Street "banks"; they were "investment bank" or similar, but not really operating as banks with Fed or FDIC oversight.

[pam4water]

28. Good find.

[jimmybama]

31. uuuhmm

I worked as a mortgage banker from 1991 to 2007. Bear Stearns
was omitted from this list. They had a product called the
NINJA (no income, no job, verified assets) credit scores had
to be good 700 plus. They were making a killing on these
loans as was I. My friends blame me for breaking the mortgage
market. Not likely. But anyway, other companies saw the $$$
Bear was making and followed suit. We all made lots of money.
I live in mid missouri and 95% of my subprimes were to people
that could afford the home at the time they just were 10 to
50 points under comforming guides. I keep an eye on the
trustee sales and I have seen a few names I did loans for.
Most of these foreclosures resulted from job loss, divorce,
death of spouse etc. My point is that on the origination end
I did all on the up and up. I know what the concequences of
fraud entail. Not interested!. The problem was on the
packaging and leveraging of the warehouse lines. Pure fuckin
greed!!! This was an excellent thread.