Financial Crisis Inquiry Commission Report Provides Key to Punishing Fraudulent Lenders in Court
The Financial Crisis Inquiry Commission (FCIC)
From January 2010 to January 2011 the ten-member Financial Crisis Inquiry Commission (FCIC) subpoenaed and interviewed hundreds of witnesses and experts, including banking officials, to determine what caused the financial crisis of 2007 to 2010 that resulted in massive foreclosures, job loss, and collapse of housing values, and total loss of equity for tens of millions of homeowners.
The FCIC Report
The FCIC concluded with a huge, 662-page FCIC Report that implicated government and lenders in a conspiracy to enrich banks, their officers and shareholders at the expense of the American public, particularly homeowners.
The FCIC Report provides mortgagors with a tool for bashing lenders in court, but so far no successes with that tool have bubbled to the surface of the cauldron of foreclosure litigation. At the very least, mortgagors should use if rigorously if not forcibly to obtain reductions in the loan balance, typically the present value of the realty minus all paid-in equity, or to get their homes free and clear because of lender-government skullduggery.
The Mortgage Scam
Why should courts order this reduction? Simple. The report, as self-authenticating evidence, proves that lenders engaged in predatory practices, making loans they knew would go into default within 3 years, thereby causing a run on insurers of mortgages and derivatives, and a consequent collapse of homeowner equity and jobs. This would allow lenders to foreclose, buy back the house for a pittance at the foreclosure auction, and cause further hardship on government through FDIC and mortgage insurance claims.
The Scam Enablers: Our Terrifyingly Esteemed Courts
The scam indeed seems brilliant. But it only seems so because the courts keep supporting it and refusing to punish it. That makes the court even more criminally culpable than the original perpetrators. Why? Because the judges swore oaths to support the constitutions and to give injured parties (mortgagors as well as mortgagees) redress of injuries.
And Their Foreclosure Defense Attorney Allies
Maybe we could blame mortgagors’ attorneys for failing to use the FCIC Report as a sledge hammer to break the courts’ “slobbering love affair” with mortgagees. Foreclosure defense attorneys seem more keen on delaying the inevitable foreclosure while picking clients’ pockets of monthly mortgage payments for 6 to 24 months, typically. They don’t seem so keen on digging into the fraud, tortious conduct, contract breaches, conspiracy, and other violations underlying the mortgage. They seem almost universally to ignore the widespread tampering of loan applications by mortgage brokers that make an unqualified borrower seem qualified, and to ignore the incessant over-appraising of residential realty from 30% to 50% above actual value, to grease machinery of the residential real estate industry (mortgage brokers, realtors, appraisers, lenders, title companies, and sellers).
Thus, the mortgagor fails to make payments because of job loss or collapse of value below the loan balance. The mortgagor injures the mortgagee by non-payment, but first the mortgagee injured the mortgagor through widespread predatory lending practices that destroyed the value of the mortagor’s home and investment.
Bottom Line – Mortgagors Deserve Redress
Bottom line: the court should not give mortgagees redress to the extent of ignoring the mortgagor’s redress. The big difference: the mortgagor didn’t intend to cheat the mortgagee, but the mortgagee certainly intended to cheat the mortgagor. Lenders devised the mortgage and securitization system specifically for that purpose. They knew what would happen. The courts should hold mortgagees responsible before addressing failure to make mortgage payments.
Litigation Strategy – Defend though Vicious Attack
If you have not read the FCIC report, do it NOW, then supply it to the court as Exhibit One in your effort to obtain justice against the world-wide mortgage scam. If you have a home loan, consult a qualified personal injury attorney about suing your lender for the torts related to the FCIC report, AND for appraisal fraud, loan application fraud, and some of the many other violations, contract breaches, and abuses perpetrated by lenders in pursuit of “easy money.” If you lawyer won’t do it, dump that lawyer and find one who will.
And Declaratory Judgment to Straighten the Record
Mortgagors should seek redress through declaratory judgment, at the very least. Since the Government’s own FCIC Report proves the existence of the crime, then that makes government actors and lenders, operating in the fraudulent, treasonous mayhem of “Public Policy,” culpable for RICO violations – civil and criminal racketeering involving Presidents and financial planners of corporations like the United States government and banks. Even your Representative and Senators share culpability for stewing in ignorance and fiddling with trifles while “Rome burnt” to the ground.
Call to Action
I say foreclosure defense attorneys must pull their heads out of their bottoms and go for the deep pockets, stab with vicious, repeated, staccato litigation at the jugular veins of the scurrilous lenders of America through civil and criminal complaints against culpable lenders and INDIVIDUALS in government and other corporations responsible for the financial crisis that revealed itself through mortgage foreclosures and homeowner equity loss.
Here I provide Google’s top seven responses to the search request for the Financial Crisis Inquiry Commission Report:
Get the Report : Financial Crisis Inquiry Commission
To view the report of the Financial Crisis Inquiry Commission, you can download the report in full or download a section of the report by clicking on the links … [PDF]
Financial Crisis Inquiry Commission – GPO Access
You +1’d this publicly. Undo
File Format: PDF/Adobe Acrobat
-4-color process CMYK. -gritty matte UV. THE. FINANCIAL. CRISIS. INQUIRYREPORT. THE. FINAN. CIAL. CRISIS. INQ. UIR. YR. EPOR. T. • OFFICIAL …
You’ve visited this page 4 times. Last visit: 10/16/11
Financial Crisis Inquiry Commission – Wikipedia, the free encyclopedia
 Creation and statutory mandate. The Commission was created by section 5 of the Fraud Enforcement and Recovery Act of 2009 (Public Law 111-21), …
What Caused the Financial Crisis? – Wall Street Journal
Jan 27, 2011 – Today, six members of the Financial Crisis Inquiry Commission—created by the last Congress to investigate the causes of the financial …
Financial Crisis Inquiry Commission’s 10 Major Findings
Jan 27, 2011 – In a report released today, the Financial Crisis Inquiry Commissionfound that “reckless” Wall Street firms, an abundance of cheap credit and …
Financial Crisis Was Avoidable, Inquiry Concludes – NYTimes.com
Jan 25, 2011 – While the panel, the Financial Crisis Inquiry Commission, accuses several financial institutions of greed, ineptitude or both, some of its gravest …
Bob Hurt: Financial Crisis Inquiry Commission Report
Mar 8, 2011 – The government issued its Financial Crisis Inquiry Commissionreport and posted it on the web.This report explains the financial crisis in gory …
You shared this
In a November 2009 article, Brookings Institution economists Martin Baily and Douglas Elliott describe the three common narratives about the financial crisis.
The first argues that the primary cause was government intervention in the housing market. This intervention, principally through Fannie Mae and Freddie Mac, inflated a housing bubble that triggered the crisis. This is the view expressed by one of our co-commissioners in a separate dissent.
The second narrative blames Wall Street and its influence in Washington. According to this narrative, greedy bankers knowingly manipulated the financial system and politicians in Washington to take advantage of homeowners and mortgage investors alike, intentionally jeopardizing the financial system while enjoying huge personal gains. That’s the view of the six majority commissioners.
We subscribe to a third narrative—a messier story that emphasizes both global economic forces and failures in U.S. policy and supervision. Though our explanation of the crisis doesn’t fit conveniently into the political order of Washington, we believe that it is far superior to the other two.
We recognize that the other two narratives have popular appeal: They each blame a clear entity, and thus outline a clear set of reform proposals. Had the government not supported housing subsidies (the first narrative) or had policy makers implemented more restrictive financial regulations (the second) there would have been no calamity.
Both of these views are incomplete and misleading. The existence of housing bubbles in a number of large countries, each with vastly different systems of housing finance, severely undercuts the thesis that the housing bubble was a phenomenon driven solely by the U.S. government. Likewise, the multitude of financial-firm failures, spanning varied organizational forms and differing regulatory regimes across the U.S. and Europe, makes it implausible that the crisis was the product of a small coterie of Wall Street bankers and their Washington bedfellows.
We believe the crisis was the product of 10 factors. Only when taken together can they offer a sufficient explanation of what happened:
The 662-page report, available online, and as a book, offers 10 main conclusions:
“This financial crisis was avoidable.”
“Despite the expressed view of many on Wall Street and in Washington that the crisis could not have been foreseen or avoided, there were warning signs,” the report reads.”The tragedy was that they were ignored or discounted.”
“Widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets.”
“Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not,” the report reads.
“The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup’s excesses in the run-up to the crisis. They did not. Policy makers and regulators could have stopped the runaway mortgage securitization train. They did not.
“Dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.”
Financial institutions acted recklessly and depended too heavily on short term loans, the inquiry found. “Compensation systems–designed in an environment of cheap money, intense competition, and light regulation–too often rewarded the quick deal, the short-term gain–without proper consideration of long-term consequences,” it reads.
“A combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.”
The inquiry found that in the years leading up to the crisis, American households, and institutions, borrowed too much and saved too little.
“When the housing and mortgage markets cratered, the lack of transparency, the extraordinary debt loads, the short-term loans, and the risky assets all came home to roost. What resulted was panic,” the report reads. “We had reaped what we had sown.”
“The government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets.”
Key government agencies, the Treasury Department, the Federal Reserve Board, and the Federal Reserve Bank of New York were behind the curve, the report concluded.
“They were hampered because they did not have a clear grasp of the financial system they were charged with overseeing, particularly as it had evolved in the years leading up to the crisis.”
“There was a systemic breakdown in accountability and ethics.”
Many borrowers lied about being able to pay mortgages, lenders made loans they knew borrowers couldn’t afford, the report said.
“Countrywide executives recognized that many of the loans they were originating could result in ‘catastrophic consequences.’ Less than a year later, they noted that certain high-risk loans they were making could result not only in foreclosures but also in ‘financial and reputational catastrophe’ for the firm. But they did not stop.”
“Collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.”
The report found irresponsible lending was prevalent, and there were warnings, but “the Federal Reserve neglected its mission,” and mortgage lenders passed the risk along.
“From the speculators who flipped houses to the mortgage brokers who scouted the loans, to the lenders who issued the mortgages, to the financial firms that created the mortgage-backed securities, collateralized debt obligations… no one in this pipeline of toxic mortgages had enough skin in the game.”
“Over-the-counter derivatives contributed significantly to this crisis…”
Speculating on devices like collateralized debt obligations fanned the flames, with everyone from farmers to corporations to investors betting on prices and loan defaults. When the housing bubble popped, these were at the center of the fallout.
“The failures of credit rating agencies were essential cogs in the wheel of financial destruction…”
But, the report found, those bets wouldn’t have been possible without the seal of approval from ratings agencies.
“This crisis could not have happened without the rating agencies. Their ratings helped the market soar and their down- grades through 2007 and 2008 wreaked havoc across markets and firms,” the report reads.