Mortgage Settlement Defines Racketeering

If the Wall Street mortgage settlement is supposed to define justice, then crime certainly does pay.

Having asked repeatedly in 2011 whether Wall Street mortgage servicing practices qualified as a racket and thus the charges filed should have been addressed as a RICO violation, yesterday we received our answer.

By any measure of ‘sense on cents’, the evidence provided screams of a RICO violation. The verdict delivered?

Crime pays.

In typical white collar fashion, though, the only face on this crime is that of the American taxpayer who gets screwed coming and going. Let’s navigate as The Wall Street Journal reports, Foreclosure Pact Alleges a Pattern of Malfeasance:

U.S. and state officials accused five large U.S. banks of overcharging and misleading borrowers in court documents filed Monday as part of the $25 billion settlement of alleged foreclosure abuses.

The filing offered a detailed description of how the five banks allegedly violated state and federal law. Officials spent more than a year investigating foreclosure practices that began as a probe of “robo-signing,” or employees approving documents without proper review.

Do you think the banks were talking to each other about ‘best practices‘ during this period? Might that qualify as collusion and thus part of a racket? I have no doubt.

Banks “engaged in a pattern of unfair and deceptive practices” and made “false or fraudulent” claims to the federal government, according to an eight-count complaint filed in U.S. district court for the District of Columbia.

A “pattern of unfair and deceptive practices”? As in “on a regular basis” or as a “normal course of business”? In layman’s terms, can you spell, R-A-C-K-E-T??!!

In settling, the five banks—Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co . and Wells Fargo & Co .—neither admitted nor denied guilt.

The American system of justice just sunk to a new low. These business units involved in this racket—er, I mean, business—were run by machines, right? I mean, is there a chance that senior executives just might have been overseeing these businesses? Neither admit nor deny guilt, right? Pay $25 billion but no guilt? Can you say joke?

The issues laid out in the complaint go well beyond the allegations of robo-signing. Among other things, the complaint alleges that the five banks charged borrowers excessive or improper fees, failed to properly apply borrower loan payments and wrongfully denied borrowers loan modifications.

The banks also provided homeowners with “false or misleading information,” failed to have appropriate staffing levels to meet the surge in troubled loans, and overcharged and improperly foreclosed on members of the military, according to the complaint.

Banks also engaged in a “continuing abuse of the bankruptcy process” and filed “false or fraudulent claims” for reimbursement from the Federal Housing Administration’s mortgage insurance program, according to the court filing.

The issues are clearly egregious, but the terms of settlement have absolutely no meaning to me. Why?

This settlement exposes the fact that a basic sense of fair dealing and business ethics were non-existent within these business units. As such, the settlement is little more than an acknowledgment that the banks were engaged in an assault upon our fellow citizens and nation as a whole.

There is NO price of justice for charges that serious and activities this coordinated. I mean, what is typically handed out for treason? 

How might Americans render their own form of justice?

I would not do business with these firms.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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