It's important to note that there were plenty of banks - many of them smaller, local institutions that were playing by the rules and continue to do so today.
Buildings and palm trees are reflected on the entrance of the Countrywide Financial Corp. office in Beverly Hills, Calif., in 2008. The top federal prosecutor in Manhattan sued Bank of America for more than $1 billion on Wednesday, Oct. 24, 2012 for mortgage fraud against Fannie Mae and Freddie Mac during the years around the financial crisis.
Just a few years back, it was possible to get a mortgage with little or no money down, and with no legitimate proof of income.
Those were the days. The days that destroyed our economy, that is.
Because the mortgage-maker turned around and sold the paper immediately, making money with each and every approval, it didn’t matter, at least not to those who were unloading the mortgages, whether a single payment was made. The lending house or bank had moved on to other people, other mortgages, more profits. What mattered – all that mattered – was writing mortgages.
Until the bottom fell out.
It’s important to note that not everyone was acting this way. There were plenty of banks – many of them smaller, local institutions – that were playing by the old rules. Still are today.
But too many others — both fly-by-night storefront operations and banking behemoths alike — were going wild.
The federal government says that Bank of America was among them. And the feds have sued BoA, looking to collect at least $1 billion. The claim is that Bank of America stuck Fannie Mae and Freddie Mac, the federally backed mortgage giants, with bad mortgages – knowing full well what it was doing.Bank of America, not surprisingly, denies the charge.
We’ve noted before that there was plenty of blame to go around in the creation of the housing bubble that ultimately cratered the economy in the summer of 2008. There was. But four years later, no one has been punished. No one has gone to jail. And no crooked financial institution has really been made to pay for what it did.
Why? The worst financial collapse since the Great Depression didn’t just happen by accident. There were people and institutions at fault.
It’s high time that some of them were held accountable.